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A 


NEW  system- 


paper  CURRENCY. 


BY  LTSAUDEE,  SPOONER. 


BOSTON: 

FEINTED  BY  STACY  & RICHAKDSON, 

Ko.  11  Milk  Street. 

18  6 1. 


Entered  according  to  Act  of  Congress,  in  the  year  1861, 

Bt  LYSANDER  SPOONER, 

in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts. 


CONTENTS. 


PART  FIRST. 


Note, 

5 

Chapter  I. — Outline  of  the  System, 

9 

Chap. 

II. — Advantages  of  the  System,  . 

14 

Chap. 

III. — Security  of  the  System, 

21 

Chap. 

IV. — Practicability  of  the  System, 

27 

Chap. 

V. — Legality  of  the  System, 

48 

PART  SECOND. 

Akticlbs  of  Association  of  a Mortgage  Stock 


Banking  Company. 


Digitized  by  the  Internet  Archive 
in  2016 


https://archive.org/details/newsystemofpaper01spoo 


NOTE 


The  subscriber  believes  that  the  right  of  property  in  ideas,  is  as  valid,  in  the 
view  both  of  the  Common  and  constitutional  law  of  this  country,  as  is  the  right 
of  property  in  material  things  ; and  that  patent  and  copyright  laws,  instead  of 
superseding,  annulling,  or  being  a substitute  for,  that  right,  are  simply  aids  to  it. 

In  publishing  this  system  of  Paper  Currency,  he  gives  notice  that  he  is  the 
inventor  of  it,  and  that  he  reserves  to  himself  all  the  exclusive  property  in  it, 
which,  in  law,  equity,  or  natural  right,  he  can  have ; and,  especially,  that  he 
reserves  to  himself  the  exclusive  right  to  furnish  the  Articles  of  Association  to 
any  Banking  Companies  that  may  adopt  the  system. 

To  secure  to  himself,  so  far  as  he  may,  this  right,  he  has  drawn  up  and  copy- 
righted, not  only  such  general  Articles  of  Association  as  will  be  needed,  but  also 
such  other  papers  as  it  will  be  necessary  to  use  separately  from  the  Articles. 

Even  should  it  be  possible  for  other  persons  to  draw  up  Articles  of  Associa- 
tion, that  would  evade  the  subscriber’s  copyright,  banking  companies,  that  may 
adopt  the  system,  will  probably  find  it  for  their  interest  to  adopt  also  the  subscri- 
ber’s Articles  of  Association  ; for  the  reason  that  it  will  be  important  that  Com- 
panies should  all  have  Articles  precisely,  legally,  and  verbally  alike.  If  their 
Articles  should  all  be  alike,  any  legal  questions  that  may  arise,  when  settled  for 
one  Company,  would  be  settled  for  all. 

Besides,  if  each  Company  were  to  have  Articles  different  from  those  of  others, 
no  two  Companies  could  take  each  other’s  bills  on  precisely  equal  terms  ; 
because  their  legal  rights,  as  bill  holders,  under  each  other’s  Articles,  would  not  be 
precisely  alike,  and  might  be  very  materially  different. 

Furthermore,  if  each  Company  were  to  have  Articles  of  Association  peculiar 
to  itself,  one  Company,  if  it  could  take  another’s  bills  at  all,  could  not  safely  take 
them  until  the  former  had  thoroughly  examined,  and  satisfactorily  ascertained, 
the  legal  meaning  of  the  latter’s  Articles  of  Association.  This  labor  among 
banks,  if  Companies  should  be  numerous,  would  be  intolerable  and  impossible. 
The  necessity  of  studying,  understanding,  and  carrying  in  the  mind,  each  other’s 
different  Articles  of  Association,  would  introduce  universal  confusion,  and  make 
it  impracticable  for  any  considerable  number  of  Companies  to  accept  each  other’s 
bills,  or  to  cooperate  in  furnishing  a currency  for  the  public.  Each  Company 
would  be  able  to  get  only  such  a circulation  as  it  could  get,  without  having  its 
bills  received  by  other  banks.  But  if  all  banks  have  precisely  similar  Articles  of 


VI 


NOTE. 


Association,  then  one  Company,  so  soon  as  it  understands  its  own  Articles, 
understands  those  of  all  other  Companies,  and  can  exchange  bills  with  them 
readily,  safely,  and  on  precisely  equal  terms. 

Moreover,  if  each  separate  Company  were  to  have  its  peculiar  Articles  of 
Association,  it  would  be  wholly  impossible  for  the  public  to  become  acquainted 
with  them  all,  or  even  with  any  considerable  number  of  them.  It  would,  there- 
fore, be  impossible  for  the  public  to  become  acquainted  with  their  legal  rights,  as 
bill  holders,  under  all  the  different  Articles.  Of  course  they  could  not  safely 
accept  the  currency  furnished  by  the  various  Companies.  But  if  all  the  Com- 
panies should  have  Articles  precisely  alike,  the  public  would  soon  understand 
them,  and  could  then  a,ct  intelligently,  as  to  their  legal  rights,  in  accepting  or 
rejecting  the  currency. 

The  subscriber  conceives  that  the  Articles  of  Association,  which  he  has  drawn 
up,  and  copyrighted,  arc  so  nearly  perfect,  that  they  will  never  need  any,  unless 
very  trivial,  alterations.  In  them  he  has  intended  to  provide  so  fully  for  all 
exigencies  and  details,  as  to  supersede  the  necessity  of  By-Laws.  This  object 
was  important,  not  only  for  the  convenience  of  the  Companies  themselves,  but 
because  any  power,  in  the  holders  of  Productive  Stock,  to  enact  By-Laws,  might 
be  used  to  embarrass  the  legal  rights  of  the  bill  holders  under  the  Articles  of 
Association. 

Besides,  as  the  holders  of  Productive  Stock  are  liable  to  be  continually 
changing,  any  power,  in  one  set  of  holders,  to  establish  By-Laws,  would  be  likely 
to  be  used  to  the  embarrassment,  or  even  injury,  of  their  successors. 

It  is  obviously  important  to  all  parties,  that  the  powers  of  the  Trustees,  and 
the  rights  of  all  holders,  both  of  Productive  and  Circulating  Stock,  should  be 
legally  and  precisely  fixed  by  the  Articles  of  Association,  so  as  to  be  incapable 
of  modification,  or  interference,  by  any  body  of  men  less  than  the  whole  number 
interested. 

LrSANDEE  SPOONEE. 

Boston,  1861. 


PIET  FIEST. 


A 


NEW  SYSTEM 

O F 

PAPER  CURRENCY. 


CHAPTER  I. 

OUTLINE  OF  THE  SYSTEM. 

The  principle  of  the  system  is,  that  the  currency  shall  repre- 
sent an  invested  dollar,  instead  of  a specie  dollar. 

The  currency  will,  therefore,  be  redeemable  by  an  invested 
dollar,  unless  the  bankers  choose  to  redeem  it  with  specie. 

Theoretically  the  capital  may  he  made  up  of  any  pi'operty 
whatever.  But,  in  practice,  it  will  doubtless  he  necessary,  in 
order  to  secure  public  confidence  in  the  currency,  that  the  capital 
should  be  property  of  a fixed  and  permanent  nature,  liable  to  few 
casualties  and  hazards,  and  yielding  a constant,  regular,  and 
certain  income,  sufiicient  to  make  the  Productive  Stock,  here- 
after mentioned,  worth  ordinarily  par  of  specie  in  the  market. 

The  best  capital  of  all  will  probably  be  mortgages ; and  they 
may  perhaps  be  the  only  capital,  which  it  will  ever  be  expedient 
to  use. 

This  capital  is  to  be  put  into  joint  stock,  held  by  Trustees,  and 
divided  into  shares,  of  one  hundred  dollars  each,  or  any  other 
sum  that  may  be  thought  best. 


10 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


This  Stock  may  be  called  the  Productive  Stock,  and  will 
be  entitled  to  the  dividends. 

The  dividends  will  consist  of  the  interest  on  the  mortgages, 
and  the  profits  of  the  banking. 

Another  kind  of  Stock,  which  may  be  called  Circulating 
Stock,  will  be  created,  precisely  equal  in  amount  to  the  Pro- 
ductive Stock,  and  divided  into  shares  of  one  dollar  each. 

This  Circulating  Stock  will  be  represented  by  certificates, 
scrip,  or  bills,  of  various  denominations,  like  our  present  bank 
bills  — that  is  to  say,  representing  one,  two,  three,  jive,  ten,  or 
more  shares,  of  one  dollar  each. 

These  certificates,  scrip,  or  bills  of  the  Circulating  Stock  will 
be  issued  for  circulation  as  a currency,  by  discounting  notes,  &c., 
as  our  bank  bills  are  now. 

This  Circidating  Stock  will  be  entitled  to  no  dividends  : and 
its  value  will  consist  wholly  * in  its  title  to  be  received,  at  its 
nominal  value,  in  payment  of  debts  due  to  the  bank,  and  to  be 
redeemed  by  Productive  Stock,  unless  the  bankers  choose  to 
redeem  it  with  specie.  In  law,  the  Circulating  Stock  will  be  in 
the  nature  of  a lien  upon  the  Productive  Stock. 


Such  are  the  general  principles  of  the  system. 

The  following  provisions,  although  perhaps  not  essential  to  the 
system,  will  yet  serve  to  keep  the  currency  at  a uniform  value, 
and  make  the  system  operate  without  friction. 


The  original  owners  of  the  Productive  Stock,  and  all  who 
hold  it  through  purchase  from  them,  (instead  of  by  transfer  in 
redemption  of  bills,)  may  be  called  Primary  Stockholders. 


* With  a single  exception,  (provided  for  in  Artiele  XXVII,  of  the  Articles  of 
Association,)  not  affecting  the  general  rule. 


OUTLINE  OP  THE  SYSTEM. 


11 


Those,  who  hold  Productive  Stock,  by  transfer  in  redemption 
of  bills,  may  be  called  Secondary  Stockholders. 

All  the  resources  of  the  bank  — that  is,  the  interest  on  the 
mortgages,  and  the  banking  profits  — should  be  pledged  to  pay 
the  Secondary  Stockholders  precisely  six  per  centum  per  annum 
(or  such  other  per  centum  as  the  Articles  of  Association  may  fix 
for  them  to  receive)  on  their  Stock ; no  more,  no  less.  After 
these  dividends  shall  have  been  paid  to  the  Secondary  Stock- 
holders, the  remaining  dividends  should  be  divided  among  the 
Primary  Stockholders  — whether  such  dividends  shall  be 
more,  or  less,  than  those  received  by  the  Secondary  Stock- 
holders. 

The  effect  of  securing  to  the  Secondary  Stockholders  pre- 
cisely six  per  centum  (or  any  other  given  per  centum)  on  their 
Stock,  will  be  to  make  the  bills  represent,  to  the  public,  either 
invested  capital,  yielding  precisely  six  per  centum  per  annum  (or 
precisely  any  other  per  centum,  which  it  may  be  designed  to 
represent)  or  specie ; because  the  bills  may,  at  pleasure,  be  con- 
verted into  such  capital,  unless  the  bankers  prefer  to  redeem 
them  with  specie. 

Whenever  Productive  Stock  shall  have  been  transferred,  in 
redemption  of  bills,  the  bankers  will  have  the  right  to  buy  it 
back,  at  pleasure,  on  paying  its  face  in  specie,  with  interest,  (or 
dividends,)  at  the  prescribed  rate,  for  the  time  it  shall  have  been 
in  the  hands  of  the  Secondary  Stockholders.* 

It  may  be  desirable,  for  various  reasons,  that  the  currency, 
representing  the  invested  dollar,  should,  at  all  times,  be,  as 
nearly  as  may  be,  on  a par  with  the  specie  dollar ; neither  rising 
above,  nor  falling  below  it,  in  value.  This  object,  nearly  enough 
for  all  practical  purposes,  can  be  accomplished  in  this  way,  to  wit : 

The  rate  of  dividend,  secured  to  be  paid  to  the  Secondary 
Stockholders,  on  their  Productive  Stock,  should  be  fixed  so 
high  as  to  make  that  Stock  worth,  in  their  hands,  par  of  specie. 


* See  Article  XIX,  of  the  Articles  of  Association. 


12 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


(Under  an  abundant  currency,  such  as  this  system  would  furnish, 
six  per  centum  would  probably  be  sufficient  for  this  purpose). 
This  would  keep  the  hills  uj)  to  par  with  specie ; because  they 
could,  at  pleasure,  be  converted  into  either  Productive  Stock, 
or  specie. 

On  the  other  hand,  the  facts,  that  the  bankers  may,  if  they 
please,  redeem  their  hills  with  specie,  rather  than  hy  Produc- 
tive Stock,  and  that  they  will  have  the  right,  at  any  time,  to 
buy  back  the  Productive  Stock,  from  the  Secondary  Stock- 
holders, by  paying  its  face  in  specie,  will  generally  keep  the 
bills  down  to  par  with  specie.* 

So  long  as  the  banking  business  shall  yield  sufficient  profit  to 
pay  expenses,  and  the  Productive  Stock  shall  remain  in  the 
hands  of  the  original  owners,  there  will  be  no  necessity  for  the 
interest  on  the  mortgages  being  paid;  because  what  would  be 
paid  in  by  each  Stockholder  as  interest,  would  come  directly  back 
to  him  as  dividend.  The  payment  of  the  interest  to  the  hank, 
and  of  the  dividends  (so  far  as  they  shall  be  made  up  of  such 
interest)  by  the  bank,  will  therefore  be  merely  nominal  transac- 
tions on  the  books  of  the  bank,  without  either  being  actually 
made. 

If  an  original  Stockholder  should  sell  his  Productive  Stock 
outright,  it  would  then  be  necessary  that  he  should  pay  his 
interest. 

* Even  if  the  rate  of  dividend,  fixed  for  the  Secondary  Stockholders  to  receive, 
were  such  as  to  make  their  Stock  worth  more  than  par  of  specie,  that  would  not 
be  likely  to  make  the  bills  worth  more  than  par  of  specie ; because  a person,  by 
returning  his  bills  for  redemption,  would  not  be  sure  of  getting  Productive 
Stock  for  them.  He  might  be  paid  in  specie,  instead  of  Productive  Stock. 

Purthermore,  even  if  his  bills  should  be  redeemed  by  Productive  Stock, 
instead  of  specie,  he  would  not  be  likely  to  hold  it  a very  long  time,  before  it 
would  be  bought  back  by  the  bank,  by  simply  paying  its  face  in  specie. 

There  would,  therefore,  be  likely  to  be  no  scramble  for  bills  (in  order  to  get 
Productive  Stock  for  them)  even  though  the  rate  of  dividend,  fixed  for  the 
Secondary  Stockholders  to  receive,  should  be  such  as  to  make  the  Productive 
Stock  worth,  in  their  hands  (supposing  they  conld  retain  it  a length  of  time) 
more  than  par  of  specie. 


OUTLINE  OF  THE  SYSTEM. 


13 


If,  when  any  Productive  Stock  shall  have  been  transferred, 
in  redemption  of  the  bills,  the  banking  profits  should  not  be 
sufficient  to  pay  the  dividends,  to  which  such  transferred  Stock 
will  always  be  entitled,  it  will  be  necessary  for  the  original 
Stockholders  to  pay  interest  pro  rata  on  their  mortgages,  suffi- 
cient, with  the  banking  profits,  to  pay  the  dividends  on  such 
transferred  Stock. 

If  any  original  Stockholder  (mortgagor)  should  wish,  at  any 
time,  to  take  his  capital  out  of  the  bank  — that  is,  release  his 
estate  from  the  mortgage  — he  has  only  to  request  the  Trustees 
to  cancel  an  equivalent  amount  of  his  own  Productive  Stock, 
and  also  an  equivalent  amount  of  Circidating  Stock.  They  can 
then  discharge  his  mortgage,  without  injustice  to  any  one ; and 
his  rights  in,  and  liabilities  to,  the  bank  are  at  an  end ; he 
having  first  paid  all  dues  that  may  have  previously  accrued. 

Minor  details  of  the  system  will  be  seen  in  the  Articles  of 
Association. 


Although  the  banks  make  no  absolute  promise  to  pay  specie 
on  demand,  the  system  nevertheless  affords  a much  better  prac- 
tical guaranty  for  specie  payments,  than  our  present  system  ; for 
these  reasons,  viz. ; 

1.  The  banks  would  be  so  universally  solvent,  and  so  univer- 
sally known  to  be  solvent,  that  no  runs  would  ever  be  made  upon 
them  for  specie,  through  fear  of  their  insolvency.  They  could, 
therefore,  maintain  specie  payments  with  much  less  amounts  of 
specie,  than  our  present  banks  can. 

2.  In  ninety-nine  times  in  a hundred,  the  alternative  redemp- 
tion would  probably  be  preferred  to  specie,  by  the  bill-holders. 
This  would  still  further  lessen  the  amount  of  specie  necessary  to 
be  kept  on  hand. 

3.  The  banks  would  probably  find  it  for  their  interest,  as  pro- 
moting the  circulation  of  their  bills,  to  pay,  at  all  times,  such 
small  amounts  of  specie,  as  the  public  convenience  might  require. 

4.  Whenever  specie  should  not  be  paid  on  demand,  no  divi- 
dends could  be  paid  to  the  bankers,  until  all  claims  for  specie, 
with  interest,  should  have  been  paid  in  full ; that  is  to  say,  until 
all  Circidating  Stock,  presented  for  redemption,  and  not  redeemed 
by  Productive  Stock,  should  have  been  redeemed  by  specie ; 
and  all  Productive  Stock,  that  should  have  been  transferred  in 
redemption  of  circulation,  should  have  been  repurchased,  by 
specie,  and  restored  to  the  original  holders.  (For  particulars  on 
this  point,  see  Articles  of  Association,  especially  Articles  13,  20, 
23,  24,  25,  26,  27,  28,  and  29.) 

5.  If  there  should  be  any  suspensions  of  specie  payments,  they 
would  be  only  temporary  ones,  by  here  and  there  a bank  sepa- 
rately, and  not  by  all  the  banks  simultaneously,  as  now.  No 
general  public  inconvenience  would  therefore  be  felt  from  that 

! cause. 

N.  B.  In  the  Articles  of  Associatioti,  the  system  appears 
much,  more  clear,  simple,  and  exact,  than  it  can  he  made  to 
do  in  any  brief  description  of  it. 

I 


14 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


CHAPTER  II. 

ADVANTAGES  OF  THE  SYSTEM. 

1.  The  system  would  furnish,  at  all  times,  an  abundant  cur- 
rency. It  would  furnish  currency  equal  to  one  third,  or  one 
half,  the  value  of  all  the  real  estate  in  the  country  — if  so  much 
could  be  used. 

2.  The  currency  would  be  stable  in  value.  The  system  is 
capable  of  furnishing  so  much  currency,  that  a large  demand 
could  be  supplied  as  easily  as  a small  one,  and  without  causing 
any  variation  in  the  market  value  of  the  currency,  or  raising  the 
rate  of  interest. 

The  presence  or  absence  of  specie  in  the  country,  would  have 
no  effect,  either  upon  the  amount  of  currency,  or  upon  the 
stability  of  its  value. 

The  prices  of  property  would  be  stable,  so  far  as  their  stability 
should  depend  upon  the  stability  of  the  currency. 

3.  The  currency  would  be  solvent.  It  would  be  absolutely 
incapable  of  insolvency ; for  there  could  never  be  a dollar  of  the 
currency  in  circulation,  without  an  invested  dollar  (Productive 
Stock)  in  bank,  which  must  be  transferred  in  redemption  of  it, 
unless  redemption  he  made  in  specie.  All  losses,  therefore,  fall 
upon  the  bankers,  and  not  upon  the  bill  holders.  If  the  original 
Stockholders  should  all  fail  — that  is  to  say,  if  they  should  be 
compelled  to  transfer  all  their  Productive  Stock  in  redemption  of 
their  circulation  — the  result  would  simply  be,  that  the  original 
capital  (Productive  Stock)  would  pass,  undiminished,  into  the 
hands  of  a new  set  of  holders,  ^cho  icould  -proceed  to  bank  upon 
it  (re-issue  the  bills,  and  redeem  them,  if  necessary.,  by  the 
transfer  of  Productive  Stock)  m the  same  way  that  their  pre- 


ADVANTAGES  OF  THE  SYSTEM. 


15 


decessors  had  done.  And  if  they,  too,  should  lose  all  their 
Productive  Stock  (capital)  by  the  transfer  of  it  in  redemption  of 
the  circulation,  the  Stock  itself  ■would  pass,  unincumbered  and 
unimpaired.^  into  the  hands  of  still  another  new  set  of  holders, 
who  would  bank  upon  it,  as  the  others  had  done  before  them. 
And  this  process  would  go  on  indefinitely,  as  often  as  one  set  of 
bankers  should  fail  (lose  all  their  Productive  Stock).  The 
holders  of  the  Productive  Stock,  for  the  time  being,  would  always 
be  the  bankers,  for  the  time  being.  And  whenever  one  set  of 
bankers  should  have  made  such  losses  as  to  compel  a transfer  of 
all  their  Productive  Stock,  that  Stock  would  pass  into  the  hands 
of  a new  set  of  holders,  and  the  bank,  as  a corporation.,  would 
be  just  as  solvent  as  at  first.  So  that,  however  badly  the  banking 
business  should  be  conducted,  and  however  frequently  the  hankers 
might  fail,  (if  transferring  all  their  capital,  or  Productive  Stock, 
in  redemption  of  their  circulation,  may  be  called  failing,)  the 
bank  itself,  as  a corporation,  . cot<Zc?  not  fail.  That  is  to  say,  its 
circulation  could  never  fail  of  redemption.  Its  capital  would 
forever  remain  intact ; forever  equivalent  to  the  circulation ; and 
forever  subject  to  a compulsory  demand  in  redemption  of  the 
circulation.  In  this  way  all  losses  necessarily  fall  upon  the 
bankers  (in  the  loss  of  their  Productive  Stock)  and  not  upon 
the  bill  holders.  (See  Article  XXI,  of  the  Articles  of  Asso- 
ciation.) 

4.  The  solvency  of  the  currency  will  be  known  by  all,  both 
in  the  neighborhood  of  the  place  of  issue,  and  at  a distance 
from  it  (if  the  bankers  should  choose  to  make  its  solvency 
known  at  a distance).  These  results  will  be  accomplished  in  this 
way. 

The  mortgages,  composing  the  capital  of  the  bank,  will  be 
matter  of  public  record,  and  every  body,  in  the  neighborhood., 
will  have  the  means  of  judging  for  himself  of  the  sufficiency  of 
the  property  holden.  If  the  property  should  be  insufficient,  the 
bank  would  be  discredited  at  once  ; for  the  abundance  of  solvent 
currency  would  be  so  great,  that  no  one  would  have  any  induce- 


16 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


ment  to  take  that  which  was  insolvent  or  doubtful.  In  this  way 
the  credit  of  a bank  would  be  established  at  home. 

Its  credit  abroad  would  be  established  in  this  way, — 

Suppose  a bank,  at  Chicago,  should  wish  to  establish  the  credit 
of  its  bills  in  New  York.  All  that  would  need  to  be  done  would 
be  to  make  arrangements  with  some  bank  in  New  York  to  redeem 
them.*  And  to  induce  the  New  York  hank  to  redeem  them,  it 
would  not  be  necessary,  as  now,  that  the  Chicago  bank  should 
keep  a deposit  of  specie  in  New  York.  All  that  would  be  neces- 
sary would  he  to  satisfy  the  New  York  bank  of  its  (the  Chicago 
bank’s)  solvency  — • that  is,  of  the  sufficiency  of  the  property 
holden.  This  could  be  done  by  the  New  York  bank’s  sending  a 
commission  to  Chicago  to  investigate  the  question.  And  when 
the  New  York  bank  should  have  once  become  convinced  of  the 
^solvency  of  the  Chicago  bank,  the  credit  of  the  latter  is  estab- 
lished forever.  The  New  York  hank  would  not  need  to  be 
continually  investigating  the  condition  of  the  Chicago  hank ; 
because,  under  this  system,  a bank,  once  solvent,  is  forever 
solvent. 

It  would,  therefore,  he  perfectly  easy  for  hanks,  in  remote 
parts  of  the  country,  to  make  their  bills  redeemable  in  the  great 
commercial  centres,  or  any  where  else  they  might  please,  without 
keeping  deposits  of  specie  at  those  points. 

One  important  result,  among  others,  of  this  system  would  he, 
that  when  a merchant,  from  Chicago,  for  example,  should  come 
to  New  York  to  make  purchases,  he  would  not  buy  on  his  own 
credit ; but  would  get  his  credit,  at  hank,  in  Chicago ; bring 
Chicago  bank  bills  to  New  York,  and  make  his  purchases  with 
them.  Or  else  the  bills  of  New  York  banks  would  be  so  abun- 
dant at  Chicago,  that  he  would  there  exchange  his  Chicago  bills 
for  New  York  bills,  and  bring  the  latter  home,  and  exchange 


* The  New  Y'ork  bank  would  not  redeem  them  by  paying  specie  for  them, 
but  by  receiving  them  in  payment  of  debts,  and  by  giving  its  own  bills  in 
exchange. 


ADVANTAGES  OF  THE  SYSTEM. 


17 


them  for  goods.  Thus  all  the  jobbing  business  of  the  country 
would  be  done  for  cash,  instead  of  on  credit,  as  now. 

5.  The  currency  would  be  cheap  (afforded  at  a low  rate  of 
interest)  and  for  two  reasons.  1 . Because  the  capital  costs  noth- 
ing. That  is,  its  use  as  banking  capital  costs  nothing ; because 
its  use  as  banking  capital,  does  not  interfere  with  its  use  for 
other  purposes.  2.  The  system  admits  of  competition  limited 
only  by  the  real  property  of  the  country.  These  two  facts 
would  bring  the  rate  of  interest,  at  all  times,  down  to  the 
lowest  point,  at  which  the  simple  business  of  banking  could  be 
profitably  done. 

6.  The  basis  of  the  currency  could  not,  like  specie,  be  carried 
out  of  the  country,  so  as  to  leave  our  own  people  destitute  of  a 
currency. 

7.  The  system  stands  wholly  on  common  law  principles ; 
requiring  no  aid  from  the  government,  in  the  way  of  charters 
of  incorporation;  and  (in  the  United  States)  constitutionally 
admits  of  no  prohibition  from  the  government.* 

8.  It  gives  the  Stockholders  all  the  benefits  of  an  act  of  incor- 
poration, so  far  as  to  shield  them  from  individual  liability.  At 
the  same  time,  it  avoids  all  necessity  for  privileged  legislation. 
It  also  avoids  all  injustice  to,  and  all  liability  of  throwing  any 
losses  upon,  the  bill  holders,  because  they  are  certain  to  get  the 


* The  author  does  not  concede  the  constitutional  power  of  the  State  govern- 
ments to  prohibit  any  kind  of  banking,  that  is  naturally  and  lawful.  And  he 
fully  believes  all  existing  restraints  upon  private  banking  to  be  unconstitutional. 
But,  be  they  so,  or  not,  it  seems  plain  enough  that  government  has  constitution- 
ally no  more  power  to  forbid  men’s  selling  an  invested  dollar,  than  it  has  to  forbid 
the  selling  of  a specie  dollar.  It  has  constitutionally  no  more  power  to  forbid  the 
sale  of  a single  dollar,  invested  in  a farm,  than  it  has  to  forbid  the  sale  of  the 
whole  farm. 

The  currency  here  proposed  is  not  in  the  nature  of  a credit  currency,  (as  the 
word  credit  is  now  legally  understood,)  and  could  not  be  prohibited  on  that 
ground,  even  if  any  credit  currency  can  constitutionally  be  prohibited. 

The  currency  proposed  consists  simply  of  hona  fide  certificates  of  Stock, 
which  the  owners  have  the  same  right  to  sell,  that  they  have  to  sell  any  other 
Stocks. 


18 


A NEW  SYSTEM  OP  PAPER  CURRENCY. 


precise  thing  they  bargained  for ; that  being  set  apart,  and  made 
legally  incapable  of  being  applied  to  any  other  purpose. 

9.  The  system  would  be  a free  one.  That  is,  the  right  of 
furnishing  currency,  instead  of  being  made  a legalized  monopoly, 
would  be  open  equally  to  every  man,  who  had  the  necessary 
property. 

10.  The  system  would  be  adapted  to  distribute  credit  equally 
as  possible  through  the  community. 

11.  Currency  and  bank  credits  would  be  so  abundant,  cheap, 
and  generally  diffused,  as  nearly  or  quite  to  supersede  all  other 
forms  of  temporary  credit  between  man  and  man,  and  introduce 
a general  system  of  cash  payments.  This  would  be  the  result, 
for  this  reason.  The  banks  could  generally,  if  not  always,  afford 
credit  cheaper  than  individuals  engaged  in  trade.  The  banks 
would  be  so  numerous,  that  a man  deserving  of  credit  at  all, 
could  generally  obtain  it  at  bank.  And  the  result  would  soon 
come  about,  that  nearly  all  temporary  credit  would  be  obtained  at 
bank,  and  cash  payments  would  be  made  in  nearly  all  transactions 
between  individuals.  The  hazards  of  trade  would  thus  be  greatly 
diminished  ; every  man’s  business  would  stand  on  its  own  basis  ; 
his  solvency  or  insolvency  would  be  an  independent  matter, 
instead  of  being  complicated,  as  now,  with  the  solvency  or  insol- 
vency of  so  many  others. 

12.  It  would  tend  to  diversify  industry  to  the  greatest  possible 
extent,  by  affording  the  best  possible  facilities,  which  a mere 
currency  system  can  furnish,  for  engaging  in  the  production  of 
all  new  commodities  as  fast  as  they  should  be  invented. 

13.  The  system  would  liberate  specie  for  the  uses  of  interna- 
tional commerce. 

14.  The  system  would  greatly  enhance  the  value  of  real 
estate,  not  so  much  by  reason  of  the  banking  profits  derived  from 
it,  as  of  the  activity  it  would  give  to  agricultural,  manufacturing, 
and  commercial  industry. 

15.  The  proposed  system  would  tend  to  graduate  the  prices  of 
property  throughout  the  country,  according  to  one  common 


ADVANTAGES  OF  THE  SYSTEM. 


19 


standard.  To  illustrate  this  point,  we  will  suppose  that,  in 
Massachusetts,  an  acre  of  land,  which  yields  a net  income  of  six 
dollars  per  annum,  over  all  charges,  is  worth  ^100.  Why  is  it 
worth  ^100  ? Because  the  rate  of  interest,  in  Massachusetts,  is 
six  per  centum  per  annum.  The  acre  of  land,  therefore,  yields 
the  same  annual  income  as  $100,  at  interest.  But,  in  Illinois, 
we  will  suppose,  an  acre  of  land,  that  yields  $12,  or  $18,  net 
income  per  annum,  (two  or  three  times  as  much  as  the  acre  in 
Massachusetts,)  is  worth  but  $100,  the  same  as  the  acre  in 
Massachusetts.  Why  is  it  worth  no  more  ? Because  the  rate  of 
interest,  in  Illinois,  is  twelve  or  eighteen  per  centum  per  annum ; 
two  or  three  times  more  than  in  Massachusetts.  The  acre  of 
land,  in  Illinois,  therefore,  although  it  yields  two  or  three  times 
as  much  income  as  the  acre  in  Massachusetts,  brings  only  the 
same  price  in  the  market,  because  it  will  yield  no  more  annual 
income  than  $100,  at  interest,  in  Illinois.  But  the  proposed 
system,  by  making  currency  abundant,  and  reducing  the  rate  of 
interest,  in  Illinois,  to  nearly  or  quite  the  same  rate  as  in  Mas- 
sachusetts, would  raise  lands,  in  Illinois,  to  a price  corresponding 
with  the  income  they  yield.  It  would  raise  them  to  substantially 
the  same  standard  of  price  with  the  lands  in  Massachusetts ; so 
that,  if  an  acre  of  land  yielded  $12,  or  $18,  net  annual  income, 
the  market  price  of  the  land  would  be  $200,  or  $300,  instead  of 
$100,  as  now. 

In  this  way,  this  system,  by  making  currency  abundant,  and 
the  rate  of  interest  low,  throughout  the  country,  would  tend  to 
graduate  the  prices  of  property  by  one  common  standard  through- 
out the  country,  according  to  the  net  income,  or  real  value,  of 
the  property. 

16.  It  would  benefit  the  condition  of  poor  men  in  various 
ways,  to  wit : First,  those  who  should  labor  for  wages,  would 
receive  their  wages  promptly,  and  in  money  (currency).  They 
would  thereby  be  enabled  to  make  their  purchases  with  cash,  and 
thus  make  them  more  advantageously  than  now.  Secondly, 
there  would  be  no  stagnations  in  business,  by  which  they  would 


20 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


be  thrown  out  of  employment,  and  compelled  to  consume  their 
accumulations,  and  perhaps  fall  in  debt.  Thirdly,  there  would 
be  a much  greater  diversity  of  industry  than  now,  and  as  a con- 
sequence, all  labor  would  be  better  paid  than  now.  Fourthly, 
those  who  should  wish  to  hire  capital,  and  establish  themselves  in 
business  of  their  own,  would  be  much  better  able  to  do  so  than 
now,  because  when  all  traffic  should  be  done  for  cash,  it  would  be 
much  more  safe  to  loan  capital  to  a poor  man,  than  it  is  now, 
when  he  is  obliged  to  give,  as  well  as  to  get,  credit.  Fifthly, 
men  of  wealth  would  retire,  earlier  than  now,  from  active  busi- 
ness, and  make  way  for,  and  loan  their  capital  to,  younger  men : 
because  they  could  certainly  loan  their  capital  more  safely  than 
now,  and  probably  more  advantageously.  By  loaning  their 
capital  first  on  mortgage,  and  thus  getting  one  income  from  it ; 
and  then  converting  the  mortgages  into  bank  capital,  and  thus 
getting  another  income  from  it,  they  would  probably  do  better 
with  their  capital,  than  to  remain  in  business.  At  any  rate,  the 
management  of  their  capital  would  thus  be  attended  with  less 
anxiety  and  risk,  than  if  they  were  to  remain  in  business  them- 
selves. 

17.  As  a standard  o'f  value,  the  currency  would  be  much 
more  uniform  than  it  is  now,  because  a dollar,  invested  for  twenty 
or  thirty  years,  where  it  is  sure  to  yield,  say,  six  per  cent,  income 
each  year  — never  more,  and  never  less  — would  obviously  main- 
tain a more  uniform  value  than  the  dollar  now  does,  which 
brings,  say,  four  per  cent,  income  this  year,  and  ten,  fifteen,  or 
twenty  next  year. 


SECURITY  OF  THE  SYSTEM. 


21 


CHAPTER  III. 

SECURITY  OF  THE  SYSTEM. 

SupposiNU  the  property  mortgaged  to  be  ample,  the  system,  as 
a system,  is  absolutely  secure.  That  is  to  say,  the  currency  is 
absolutely  sure  of  redemption.  The  capital  cannot,  in  any 
possible  event,  he  reduced  below  the  amount  necessary  for  the 
redemption  of  the  entire  circulation. 

The  only  question,  then,  is  — what  assurances  have  the  public, 
that  the  property  mortgaged  will  always  be  ample  ? 

The  answer  is,  that  they  have  abundant  assurances,  as  follows : 

1.  The  mortgages  will  all  be  on  record,  where  any  body 
interested  can  examine  them,  and  judge  for  himself  whether  the 
property  holden  is  sufficient. 

2.  Each  bank  will  find  it  expedient  to  print  a large  number  of 
copies  of  its  Articles  of  Association,  including  copies  of  its 
mortgages.  Appended  to  these  copies,  may  be  copies  of  the 
certificates  of  appraisers,  as  to  the  value  of  the  property.  These 
certificates,  if  they  come  from  men  of  known  character  and 
judgment,  will  be  entitled  to  confidence.  Certificates  also  of  the 
assessed  value  of  the  property,  on  the  tax  lists  of  the  town,  may 
be  appended;  and  these,  coming  from  disinterested  and  honest 
men  of  good  judgment,  as  the  assessors  of  taxes  usually  are,  will 
he  worthy  of  reliance. 

Copies  of  the  Articles  of  Association,  with  these  certificates 
appended,  will  be  sent,  by  the  bank,  to  other  banks,  and  given  to 
individuals,  with  whom  the  bank  wishes  to  establish  its  credit. 

3.  The  Trustees  of  a bank  will  be  generally  known  as  men  of 
character  and  judgment  — for  otherwise  a bank  Avould  be  dis- 
credited at  once.  If  they  are  thus  known,  their  acceptance  of 


22 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


the  office  of  Trustees,  will  be  a reasonable  guaranty  for  the 
sufficiency  of  the  property  bolden ; for  such  men  would  not  be 
likely  to  become  Trustees,  except  for  a solvent  bank. 

4.  The  abundance  of  undoubted  currency  would  be  such,  that 
the  public  would  be  under  no  necessity  to  take  doubtful  currency ; 
and  therefore  doubtful  currency  could  get  no  circulation  at  all. 

5.  Mortgages  upon  the  real  property  of  the  Country,  at  one 
third,  or  one  half,  its  value,  would  probably  furnish  a great  deal 
more  currency  than  could  be  used.  No  one  company,  therefore, 
could  expect  to  get  out  a circulation  of  more  than  one  third,  or 
one  half,  the  value  of  the  property  mortgaged.  It  would  be  of 
no  use  for  them,  therefore,  to  mortgage  their  property  for  more 
than  that  amount.  If  they  should  mortgage  their  property  for 
more,  and  attempt  to  get  out  more  circulation,  they  would  thereby 
discredit  their  bank,  and  thus  either  fail  of  getting  any  circula- 
tion at  all,  or  certainly  fail  of  getting  as  much  circulation  as  they 
might  have  got,  if  their  property  had  been  mortgaged  only  for  a 
proper  amount.  It,  therefore,  would  not  be  for  the  interest  of  a 
banking  company  to  mortgage  their  property  at  a higher  rate 
than  one  third,  or  one  half,  its  value.  And  at  this  rate,  the 
mortgages  Avould  be  safe  for  a long  series  of  years,  (unless  in 
very  extraordinary  cases,)  because,  under  a system  of  abundant 
currency,  real  estate  would  always  be  rising  in  value,  rather  than 
falling.  The  mortgages,  therefore,  would  be  growing  better  all 
the  while,  instead  of  growing  worse. 

6.  By  the  Articles  of  Association,  all  the  mortgages,  which 
make  up  the  capital  of  a bank,  are  made  mutually  responsible  for 
each  other;  because,  (see  Articles  XXIX  and  XXXVII,)  if 
any  one  mortgage  proves  insufficient,  no  dividend  can  afterwards 
be  paid  to  any  Primary  Stockholder,  until  that  deficiency  has 
been  made  good  by  the  company.  The  effect  of  this  provision 
will  be,  to  make  all  the  founders  of  a bank  look  carefully  to  the 
sufficiency  of  each  other’s  mortgages ; because  no  man  will  be 
willing  to  put  in  a good  mortgage  of  his  own,  on  equal  teims 
with  a bad  mortgage  of  another  man’s,  when  he  knows  that  his 


SECURITY  OF  THE  SYSTEM. 


23 


own  mortgage  will  have  to  contribute  to  make  good  any  deficiency 
of  the  other.  The  result  will  be  that  the  mortgages,  that  go  to 
make  up  the  capital  of  any  one  bank,  will  be  either  all  good,  or 
all  bad.  If  they  are  all  good,  the  solvency  of  the  bank  will  be 
apparent  to  all  in  the  vicinity  ; and  the  credit  of  the  bank  will 
at  once  be  established,  at  home.  If  the  mortgages  are  all  bad, 
that  fact  also  will  be  apparent  to  every  body  in  the  vicinity  ; and 
the  bank  is  at  once  discredited,  at  home. 

From  all  the  foregoing  considerations,  it  is  evident  that  nothing 
is  easier  than  for  a good  bank  to  establish  its  credit,  at  home ; 
and  that  nothing  is  more  certain  than  that  a bad  bank  would  be 
discredited,  at  home,  from  the  outset,  and  get  no  circulation 
at  all. 

It  is  also  evident  that  a bank,  that  has  no  credit  at  home,  could 
get  none  abroad.  There  is,  therefore,  no  danger  of  the  public 
being  swindled  by  bad  banks. 

7.  It  would  be  easy  for  a good  bank  to  establish  its  credit 
abroad  — for  it  could  do  it  by  establishing  its  credit  with  other 
banks.  This  it  could  do,  partly  by  means  of  its  credit  at  home, 
and  partly  by  making  arrangements  with  other  banks  to  redeem 
its  bills.  In  order  to  do  this,  it  must  be  at  the  necessary  expense 
and  trouble  of  satisfying  these  other  banks  of  its  solvency  — that 
is,  by  furnishing  them  satisfactory  evidence  of  the  sufficiency  of 
the  mortgaged  property ; a thing,  that  is  obviously  very  easy  to 
be  done,  if  the  mortgaged  property  be  really  sufficient. 

8.  In  addition  to  the  security  of  each  individual  mortgage, 
and  of  the  mutual  responsibility  of  the  mortgages  for  each  other, 
there  is  the  still  further  security  of  all  the  debts  due  to  the 
banks;  debts  a little  more  than  equivalent  (by  the  amount  of 
interest  on  the  loans)  to  the  amount  of  bills  in  circulation.  * 

In  this  connexion  it  may  be  added,  that  under  the  system 
proposed,  the  banking  business  will  be  a much  safer  business  than 
it  is  now ; and  consequently  the  debts  due  to  the  bank  will  be  a 
much  better  security  for  the  solvency  of  the  bank,  than  such 
debts  now  are ; because,  under  a system,  which  furnishes,  at  all 


24 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


times,  a constant  and  ample  supply  of  currency,  industry  and 
trade  will  be  subject  to  none  of  those  revulsions  and  stagnations, 
Avhich  cause  extensive  or  general  bankruptcies ; the  debtors  of 
banks  will  all  make  their  sales  for  cash,  instead  of  giving 
credit.  For  these  reasons  the  credits,  given  by.  the  banks, 
will  obviously  be  much  more  uniformly  safe  than  they  now 
are ; and  consequently  the  debts,  due  the  banks,  will  afford  a 
much  better  security,  than  they  now  do,  for  the  solvency  of  the 
banks  themselves. 

9. , The  banks  themselves  would  act  as  guardians  to  the  public 
against  frauds  by  each  other.  This  would  be  done  in  this  way. 
Bank  A (a  solvent  bank)  would  not  receive  the  bills  of  bank  B, 
unless  bank  B had  first  satisfied  bank  A of  its  solvency.  And 
bank  A would  be  satisfied  only  by  personal  examination  of  the 
mortgages  of  bank  B.  In  this  way  any  unsound  bank  would  be 
discredited  by  the  surrounding  banks,  and  thus  discredited  in 
the  eyes  of  the  community. 

But  it  has  been  said  that  under  the  New  York  free  banking 
law,  mortgages  are  deposited  with  the  State  Comptroller,  (or 
Superintendent  of  Banks,)  as  security  for  the  redemption  of  the 
currency ; and  that  when  these  mortgages  come  to  be  sold,  the 
lands  often  fail  to  bring  the  amount  of  the  mortgage.  And  the 
question  has  been  asked,  whether,  under  the  system  here  pro- 
posed, the  mortgaged  property  might  not  prove  insufficient,  as 
well  as  in  New  York? 

The  answer  is,  that  the  mortgages  in  New  York  may  have 
proved  insufficient  for  either  or  both  of  two  reasons. 

1.  They  may  have  proved  insufficient,  because  the  lands,  being 
sold  for  specie^  at  a time  when  specie  had  mostly  left  the 
country^  could  not  bring  what  was  not  to  he  had  — that  is, 
specie.  But  this  is  no  proof  that  the  lands  were  not,  in  ordi- 
nary times,  and  under  an  abundant  currency,  a sufficient  secur- 
ity ; but  only  that,  when  specie  has  gone  out  of  the  country, 
lands  are  affected  like  all  other  property,  and  will  not,  any  more 
than  other  property,  bring  their  true  value  m specie. 


SECURITY  OP  THE  SYSTEM. 


25 


But  under  the  system  proposed,  the  absence  of  specie  would 
occasion  no  contraction  of  the  currency,  and  no  depression  in  the 
price  of  lands.  And  therefore  a mortgage,  that  was  sufficient  at 
one  time,  would  be  sufficient  at  all  times.  No  forced  sales 
would  he  made;  but  the  mortgages  would  run  (if  only  the 
interest  were  paid)  until  the  final  winding  up  of  the  bank.  If 
the  interest  were  not  paid,  the  bank  would  take  possession,  and 
apply  the  rents  to  the  payment  of  the  interest.  Or,  at  worst, 
they  would  sell  the  property.  And  it  could  always  be  sold 
advantageously,  because,  there  never  being  a scarcity  of  currency, 
property  in  general  would  never  be  depressed. 

2.  The  other  reason,  for  the  failure  of  the  Hew  York  mortga- 
ges, may  have  hQQn  frandident  appraisals. 

The  facilities  for  fraudulent  appraisals  are  much  greater  under 
the  Hew  York  system,  than  they  would  be  under  the  system 
proposed,  and  for  these  reasons. 

Under  the  Hew  York  system,  all  that  is  necessary  to  get  a 
bank  in  operation,  is,  that"  mortgages,  satisfactory  to  the  State 
Comptroller,  or  Superintendent  of  Banks,  should  be  deposited 
with  him.  And  he  accepts  the  mortgages  on  the  simple  appraisal 
of  men,  appointed  by  himself,  or  satisfactory  to  himself.  This 
being  done,  the  currency  is  then  issued,  and  the  public  receive  it, 
because  the  State  has  thus  virtually  certified  that  it  is  well 
secured. 

How,  it  is  evident  that  all  that  is  necessary  to  get  up  a 
swindling  bank,  under  this  system,  is  simply  to  secure  the 
approval  of  oiie  man  — the  Comptroller,  (or  Superintendent  of 
Banks,)  who  knows  nothing  of  the  land  himself — to  the  ap- 
praisal of  the  land  mortgaged.  If  but  this  one  man  can  either 
be  cheated,  or  be  induced  to  become  himself  a cheat,  all  the 
other  consequences  follow ; because  the  currency  is  then  issued 
under  his  authority,  and  is  received  by  the  public,  on  the  strength 
of  his  virtual  indorsement. 

How,  as  it  cannot  be  a very  difficult  matter  to  cheat  this  one 
man^  or  perhaps  to  induce  him  to  become  himself  a cheat,  in 
4 


26 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


such  a case  as  this,  it  is  evident  that  the  system  atFords  little 
security  for  the  sufficiency  of  the  mortgages. 

But  under  the  system  proposed,  no  such  facilities  for  fraud 
would  exist,  because  the  credit  of  the  bank  would  not  rest  upon 
the  certificate  of  any  one  man,  nor  upon  any  indorsement  of  the 
State.  The  State  would  not  indorse  the  currency  at  all,  any 
more  than  it  now  indorses  the  notes  or  mortgages  of  private 
persons.  Each  bank  would,  therefore,  have  to  stand  on  its  own 
merits,  subject  to  the  scrutiny  of  the  whole  community. 


PRACTICABILITY  OP  THE  SYSTEM. 


2T 


CHAPTER  IV. 

PRACTICABILITY  OP  THE  SYSTEM. 

.The  system  is  plainly  practicable,  provided  the  currency 
will  pass. 

The  only  question,  then,  is,  whether  the  currency  will  pass  ? 
Whether  men,  if  left  to  do  as  they  please,  will  buy  and  sell  it, 
in  exchange  for  other  commodities,  as  they  now  buy  and  sell  gold 
and  silver  coin,  and  bank  notes,  in  exchange  for  other  com- 
modities ? 

To  answer  this  question,  it  is  necessary  to  ascertain  what  it  is, 
that  makes  any  thmg  pass  as  a currency. 

What,  for  example,  is  it,  that  makes  gold  and  silver  coin  pass 
as  a currency  ? 

The  answer  is,  that_^i7e  conditions  are  necessary  to  make  any 
thing  pass  readily  as  a currency.  First,  that  the  thing  should 
have  much  value,  and  yet  be  of  small  bulk  and  weight ; secondly, 
that  it  should  be  divisible  into  small  parcels ; thirdly,  that  the 
quantity  and  quality  of  each  of  these  parcels  should  be  accurately 
measured,  and  then  reliably  marked  upon  the  parcels  themselves  ; 
fourthly,  that  these  parcels  should  be  convenient  for  being  manip- 
ulated, counted,  transported,  &c.  ; fifthly,  that  the  currency 
should  have  a publicly  known  market  value.* 

These  are  the  only  conditions,  that  are  necessary  to  make  any 
thing  pass  readily  as  a currency. 

The  paper  currency  proposed  — the  mortgage  stock  currency — 
fulfils  all  these  conditions.  First,  it  would  have  much  value  in 
small  bulk  and  weight.  Secondly,  it  would  be  conveniently 

* Diamonds  would  not  answer  well  as  a currency,  because,  although  they 
have  a market  value,  that  value  is  known  only  to  a few. 


28 


A NEW  SYSTEM  OP  PAPER  CURRENCY. 


divisible  into  small  parcels,  that  is,  parcels  as  small  as  one  dollar. 
Thirdly,  the  quantity  and  quality  of  these  parcels  would  be 
accurately  measured,  and  reliably  marked  upon  the  parcels  them- 
selves. Fourthly,  the  parcels  would  be  convenient  for  being 
manipulated,  counted,  transported,  &c.  And,  Fifthly,  the 
currency  would  have  a ymhlichj  known  market  value.  Its 
market  value,  in  comparison  with  other  commodities,  would  cer- 
tainly be  as  well  known,  as  is  the  market  value  of  gold  and  silver 
coins,  or  bank  notes. 

There  is  no  reason,  then,  why  it  should  not  pass,  as  a cur- 
rency — at  its  market  value  — Avhatever  that  may  be. 

Its  market  value  may  be  greater  or  less  than'  that  of  gold  and 
silver ; but  this  would  not  prevent  its  passing,  at  its  market 
value.  Indeed  the  market  value  of  any  thing  is  only  that  value, 
at  which  the  thing  will  sell  readily  in  the  market.  So  that,  to 
say  that  a thing  has  a market  value  — a publicly  known  market 
value  — is  equivalent  to  saying  that  it  will  pass  as  a currency, 
provided  it  be  convenient  in  all  other  respects. 


Secondly. 

But  would  this  paper  currency  be  as  much  in  demand,  in  the 
market,  as  gold  and  silver  coins  now  are  ? That  is,  would  it  sell 
as  readily  as  the  coins  now  do,  in  exchange  for  other  com- 
modities ? 

To  answer  this  question,  we  must  ascertain  why  it  is  that  the 
coins  are  in  demand  at  all,  as  currency  ; why  it  is  that  they  have 
a market  value ; ^vhy  it  is  that  every  man  will  accept  them  in 
exchange  for  any  thing  he  has  to  sell. 

The  solution  of  these  queries  is,  that  the  original,  jirimal 
source  of  all  the  demand  for  them,  as  currency  — the  essential 
reason  why  they  have  a market  value,  and  sell  so  readily  in  ex- 
change for  all  other  commodities  — is  because  they  are  wanted,  to 
he  taken  out  of  circulation,  and  converted  into  plate,  jewelry, 
and  other  articles  of  use. 


PRACTICABILITY  OF  THE  SYSTEM. 


29 


If  they  were  not  wanted,  io  he  taken  out  of  circulation^  and 
wrought  into  articles  of  use,  they  could  not  circulate  at  all,  as  a 
currency.  No  one  would  have  any  motive  to  buy  them  ; and  no 
one  would  give  any  thing  of  value  in  exchange  for  them. 

The  reason  of  this  is,  that  gold  and  silver,  in  the  state  of  coin, 
cannot  be  used.*  Consequently,  in  the  state  of  coin,  they 
duce  nothing  to  the  ovmer.  A man  cannot  alford  to  keep  them, 
as  an  investment,  because  that  would  be  equivalent  to  losing  the 
use  of  his  capital.  He  must,  therefore,  either  exchange  them  for 
something  that  he  can  use  — something  that  will  be  productive  — 
yield  an  income ; or  else  he  must  convert  them  into  plate,  jewelry, 
&c.,  in  which  form  he  can  use  them,  and  thus  get  an  income 
from  them.  ' 

It  is,  therefore,  only  when  gold  and  silver  coins  have  been 
wrought  up  into  plate,  jewelry,  &c.,  that  they  can  be  said  to  be 
invested ; because  it  is  only  in  that  form,  that  they  can  be  used, 
be  productive,  or  yield  an  income. 

The  income,  which  they  yield,  as  investments  — that  is,  the 
income,  which  they  yield,  when  used  in  the  form  of  plate, 
jewelry,  &c., — is  yielded  mostly  in  the  shape  of  luxurious 
pleasure  — the  pleasure  of  gratified  fancy,  vanity,  or  pride. 

The  amount  of  this  income  we  will  suppose  to  be  six  per 
centum  per  annum,  on  their  whole  value.  That  is  to  say,  a 
person,  who  is  able,  and  has  tastes  that  ivay,  will  give  six  dollars 
a year  for  the  simple  pleasure  of  using  one  hundi-ed  dollars 
worth  of  plate,  jewelry,  &c. 

This  six  dollars  worth  of  pleasure,  then,  or  six  dollars  worth 
of  gratified  fancy,  vanity,  or  pride,  is  the  annual  income  from 
an  investment  of  one  hundred  dollars  in  gold  and  silver  plate, 
jewelry,  &c. 

This,  be  it  noticed,  is  the  only  income,  that  gold  and  silver 
are  capable  of  yielding ; because  plate,  jewelry,  &c.,  are  the  only 
forms,  in  which  they  can  be  iised.  So  long  as  they  remain 

* The  sale  of  them,  as  a currency,  is  not  a use  of  them ; any  more  than  the 
sale  of  a horse  is  a use  of  the  horse. 


30 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


in  coin,  they  cannot  be  used^  and  therefore  cannot  yield  an 
income. 

It  is,  then,  only  this  six  per  centum  annual  income  — this  six 
dollars  worth  of  pleasure  — Ayhich  gold  and  silver  yield,  as 
investments,  that  is  really  the  cause  of  all  the  demand  for  them, 
in  the  market,  and  consequently  of  their  passing  as  a currency. 

This  fact  may  now  be  assumed  to  be  established,  viz.  : that  the 
origin  of  all  the  demand  for  gold  and  silver,  as  a currency  — 
the  essential  reason  why  they  have  a market  value,  and  sell  so 
readily  in  exchange  for  other  commodities  — is  because  they  are 
wanted,  to  be  taken  out  of  circulation,  and  converted  into 
plate,  jewelry , 6^'c.,  in  which  form  only  they  are  capable  of  being 
used,  or  of  yielding  an  income. 

By  this  it  is  not  meant  that  every  man,  who  takes  a gold  or 
silver  coin,  as  currency,  takes  it  because  he  himself  wants  a 
piece  of  gold  or  silver  plate,  or  jewelry ; nor  because  he  himself 
intends  or  wishes  to  work  it  into  plate  or  jewelry  ; for  such  is  not 
the  case,  probably,  with  one  man  in  a thousand,  or  perhaps  one 
man  in  ten  thousand,  of  those  who  take  the  coin.  Each  man 
takes  it,  as  currency,  simply  because  he  can  sell  it  again.  But 
he  can  sell  it  again  solely  because  some  other  man  wants  it.  or 
because  some  other  man  will  want  it,  in  order  to  convert  it  into 
articles /o?’  use.  He  can  sell  it,  solely  because  the  goldsmith, 
the  silversmith,  the  dentist,  &c.,  will  sometime  come  along  and 
buy  it,  take  it  out  of  circulation,  and  work  it  up  into  some 
article  for  consumption  — that  is,  for  use. 

This  f?tal  consumption,  or  use,  thenj  is  the  mainspring  that 
sets  the  coins  in  circulation,  and  keeps  them  in  circulation,  as  a 
currency. 

It  is  solely  the  consumption,  or  use,  of  them,  in  other  articles 
than  currency,  that  creates  any  demand  for  them,  in  the  mai'ket, 
as  currency. 

It  is,  then,  only  the  value,  which  gold  and  silver  have,  as 
productive  investments,  in  articles  of  use,  in  plate,  jewelry, 
4*c.,  that  creates  any  demand  for  them,  and  enables  them  to  pass, 
as  a currency. 


PRACTICABILITY  OP  THE  SYSTEM. 


31 


This  fact,  then,  being  established,  the  following  proposition  is 
an  inevitable  deduction  from  it,  viz. : that  the  activity  of  the 
demand  for  gold  and  silver  coins,  as  a currency^  depends  wholly 
upon  the  activity  of  the  demand  for  them,  to  be  taken  out  of 
circulation^  and  converted  into  plate,  jewelry,  &c. 

To  illustrate  this  point,  let  us  suppose  a community  of  one 
million  of  people,  shut  out  from  the  rest  of  the  world,  having 
• among  them  one  million  dollars  of  gold  and  silver  coins,  and 
having  no  gold  or  silver  among  them,  except  in  coins.  If  but 
one  dollar  of  these  coins  were  to  be  taken  out  of  circulation  each 
year,  and  converted  into  plate,  jewelry,  or  other  articles  of  use, 
the  demand  for  all  the  remaining  coins,  as  a currency,  would 
wholly,  or  substantially,  cease.  And  why?  Solely  because  the 
stock  of  coins  on  hand,  (or  the  stock  of  gold  and  silver  on  hand,) 
would  be  equal  to  a million  years’  consumption.  The  consequence 
obviously  would  be  that  gold  and  silver  would  have  no  value  in 
the  market ; any  more  than  cotton  or  iron  would  have  a value  in 
the  market,  if  there  were  a million  years’  stock  on  hand. 

But  if,  instead  of  one  dollar,  an  hundred  thousand  dollars 
were  annually  taken  out  of  circulation,  and  converted  into  plate, 
jewelry,  or  other  articles  of  use,  (even  though  their  place  were 
annually  supplied  by  an  equal  amount  taken  from  the  mines,) 
this  demand  for  the  coins,  to  be  taken  out  of  circulation,  would 
create  a corresponding  demand  for  them,  as  a currency.  And 
why  ? Solely  because  the  stock  of  gold  and  silver  on  hand, 
would  be  equivalent  only  to  ten  years’  consumption.  This  would 
give  them  a value,  where  before  they  had  none ; and  enable  them 
to  circulate,  as  a currency,  where  before  they  could  not. 

Thus  it  is  evident  that  the  whole  demand  for  gold  and  silver, 
as  a currency,  depends  upon  the  demand  for  them  for  consump- 
tion, as  plate,  jewelry,  Spc.  And  consequently  the  activity  of 
the  demand  for  them,  as  a currency,  depends  upon  the  activity 
of  the  demand  for  them,  for  consumption.  In  other  words,  the 
activity  of  the  demand  for  the  coins,  as  a currency,  depends 
upon  the  activity  of  the  demand  for  them  as  investments,  in 
articles  of  use. 


32 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


And  what  is  true  of  the  coins,  would  be  true  also  of  the  paper 
currency  proposed.  The  activity  of  the  demand  for  the  Circu- 
lating Stock,  as  currency,  would  be  just  in  proportion  to  the 
demand  for  the  mortgages,  or  Productive  Stock,  as  investments. 
As  the  coins  would  be  in  demand,  as  a currency,  solely  in  pro- 
portion to  the  demand  for  them,  to  be  invested  in  plate,  jeAvelry, 
&c.,  so  the  paper  currency  would  be  in  demand,  as  currency, 
solely  in  proportion  to  the  demand  for  it,  to  be  invested  in  • 
mortgao-es,  or  Productive  Stock.  The  demand  for  these  two 
different  kinds  of  investments,  would  govern  the  demand  for  the 
two  different  kinds  of  currency. 

Now,  in  order  to  determine  whether  the  paper  currency  pro- 
posed woidd  he  in  as  much  demand,  in  the  market,  as  the  gold 
and  silver  coins  circulating  in  competition  with  it,  we  have  only 
to  determine  whether  the  community  at  large  would  wish  to  make 
annually  as  many  investments,  in  the  mortgages  proposed,  as 
they  tvoidd  in  plate,  jewelry,  <^'c.  Or,  perhaps,  rather,  the  true 
question  is,  whether  as  large  a proportion  of  the  whole  stock  of 
paper  currency,  in  the  market,  would  be  annually  taken  out  of 
circulation,  and  invested  in  the  mortgages,  as  of  the  gold  and 
silver  coin  in  plate,  jewelry,  &c.  If  such  would  be  the  case, 
then  one  kind  of  currency  would  he  just  as  much  in  demand  as 
the  other. 

To  illustrate  this  point,  suppose  that,  in  this  country,  one 
hundred  millions  of  coin,  and  one  hundred  millions  of  the  pro- 
posed paper  currency,  were  in  circulation,  in  competition  with 
each  other.  And  suppose  that  ten  millions  of  the  coin  — that  is, 
ten  per  centum  of  the  whole  stock  of  coin  — were  annually 
wanted  to  be  taken  out  of  circulation,  and  invested  in  plate, 
jewelry,  ^’c.  ; and  that  ten  millions  also  of  the  papier  currency — 
that  is,  ten  per  centum  of  the  whole  stock  of  paper  currency — 
were  annually  wanted,  to  be  taken  out  of  circulation,  and  in- 
vested in  the  mortgages,  the  market  demand  for  these  two  kinds 
of  currency  would  be  precisely  alike. 

Or  suppose  that  07ie  hundred  millions  of  coin,  and  Jive 


PRACTICABILITY  OF  THE  SYSTEM. 


33 


hundred  millions  of  the  paper  currency,  were  in  circulation,  in 
competition  with  each  other ; and  that  ten  millions  of  the  coin 
(ten  per  centum  of  the  whole  stock  of  coin)  were  annually 
wanted,  to  be  taken  out  of  circulation,  and  invested  in  plate, 
jewelry,  &c.,  and  that  fifty  millions  of  the  paper  currency  (ten 
per  centum  on  the  whole  stock  of  paper  currency "J  were  annually 
wanted,  to  be  taken  out  of  circulation,  and  invested  in  mortgages, 
the  demand,  in  the  market,  for  each  of  the  two  kinds  of  currency 
would  still  be  precisely  equal,  in  point  of  activity.  That  is  to 
say,  one  kind  of  currency  would  circulate  just  as  readily  as  the 
other. 

On  this  theory,  it  is  very  easy  to  settle  the  question  of  the 
comparative  demand  for  the  two  different  kinds  of  currency ; for, 
although  the  amount  of  paper  currency  might  perhaps  be  fifty  or 
an  hundred  times  greater  than  the  amount  of  gold  and  silver,  yet 
the  demand  for  the  mortgages  (Productive  Stock)  as  invest- 
ments, would  probably  be  fifty  or  an  hundred  times  greater  than 
the  demand  for  plate,  jewelry,  &c.,  as  investments. 

The  reason,  why  there  would  be  this  greater  demand  for  the 
mortgages,  as  investments,  is,  that  they  would  yield  their  income, 
in  money,  or  currency,  which  could  be  appropriated  to  the  sup- 
ply of  any  and  all  the  various  necessaries,  wants,  comforts,  and 
pleasures,  which  money  can  buy ; while  the  plate,  jewelry,  &c., 
as  investments,  yield  their  income  mostly  in  the  shape  of  a 
luxurious  pleasure,  which  most  persons  do  not  highly  appreciate, 
and  which  few  persons  can  indulge  in,  to  any  considerable  extent, 
without  being  compelled  to  pinch  themselves  in  the  matter  of 
common  necessaries  and  comforts. 

Mankind,  therefore,  desire  to  have  the  great  bulk  of  their 
property  invested  so  as  to  yield  an  income  in  money ; and  only  a 
very  small  portion  of  it  in  such  articles  of  fancy  as  plate, 
jewelry,  &c. 

Under  these  circumstances,  it  is  probable  that  if  the  paper 
currency  were  in  circulation  in  competition  with  the  coin,  in  the 
proportion  of  fifty  or  an  hundred  to  one,  the  paper  would  be  just 
5 


34 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


as  acceptable  a currency  as  the  coin ; would  be  just  as  much  in 
demand ; would  exchange  just  as  readily  for  other  commodities ; 
and  would  equally  well  maintain  its  value  in  the  market. 


Thirdly. 

Would  the  mortgages,  or  Productive  Stock,  be  so  desirable  a 
form  of  investment,  as  to  invite  capital  into  it,  and  thus  create  a 
demand  for  the  currency,  with  a view  to  having  it  redeemed  by 
Productive  Stock  ? 

The  answer  is,  that  the  Productive  Stock  would  be  a desirable 
investment,  for  the  various  reasons  of  security,  profit,  and  con- 
venience. 

1.  As  regards  security,  no  kind  of  investment  would  exceed  it. 

2.  As  regards  profit,  the  Productive  Stock  would  pay  two 
different  dividends  — one  to  Primary  holders,  and  the  other  to 
Secondary  holders. 

The  dividends  to  Primary  Stockholders  would  be  made  up  of 
the  interest  on  the  mortgages,  and  the  profits  of  the  banking. 
The  rate  of  these  dividends,  therefore,  will  depend  upon  the 
rate  of  interest  on  the  mortgages,  and  the  amount  of  banking 
profits. 

Probably  the  best  rate  of  interest  for  the  mortgages  to  bear, 
would  be  seven  per  centum.  This  would  probably  be  sufficient 
to  make  the  Productive  Stock,  in  the  hands  of  Primary 
holders,  worth  more  than  par  of  specie,  even  though  there 
should  be  no  profits  at  all  from  the  banking  business.  But  if 
there  should  be  profits  from  the  banking  business,  they  would  go 
to  swell  the  dividends.  So  that  the  dividends  to  Primary 
Stockholders  would  never  be  less  than  seven  per  cent,  so  long  as 
the  banking  business  should  simply  pay  expenses;  and  they 
would  rise  above  that  rate  just  in  proportion  to  the  banking 
profits.  There  can,  therefore,  be  no  doubt  of  the  desirable  char- 
acter of  the  Productive  Stock,  as  investments,  in  the  hands  of 
Primary  holders. 


PRACTICABILITY  OP  THE  SYSTEM. 


35 


In  the  hands  of  Secondary  holders,  the  Productive  Stock 
would  pay  an  unvai’jing  rate  of  dividend,  fixed  by  the  Articles 
of  Association. 

The  currency  would  represent  the  Prodiictive  Stock,  in  the 
hands  of  Secondary  holders,  and  not  in  the  hands  of  Primary 
holders ; because  the  holders  of  the  currency,  by  returning  it  for 
redemption,  could  generally  expect  to  make  themselves  only 
Secondary  holders  of  the  Productive  Stock.  They  could  rarely 
expect  to  become  Pi  imary  holders : and,  therefore,  would  not 
return  the  currency  for  redemption,  with  that  view. 

Probably  six  per  centum  would  be  the  best  rate  of  dividend,  to 
be  fixed  for  the  Secondary  Stockholders  to  receive ; for  that  is 
probably  the  rate,  that  would  put  the  currency  most  nearly  on  a 
par  with  specie.  If  the  rate  were  fixed  at  seven  per  cent.,  the 
Productive  Stock,  in  the  hands  of  Secondary  holders,  would  be 
worth  more  than  par  of  specie  ; and  the  consequence  would  be, 
that  the  currency  would  he  returned  for  redemption,  in  the  hope 
to  get  Productive  Stock,  rather  than  specie.  And  thus  the 
currency  could  not  be  kept  in  circulation.  On  the  other  hand,  if 
the  rate  of  dividend,  for  the  Secondary  Stockholders,  were  fixed 
at  o'tAy  five  per  cent.,  that  might  prove  insufficient  to  make  the 
currency  worth  par  of  specie.  Therefore  six  per  cent,  is  likely 
to  prove  a better  rate  than  either  five  or  seven. 

Supposing,  then,  the  rate  of  dividend,  for  Secondary  Stock- 
holders to  receive,  to  be  fixed  at  six  per  cent.,  the  investment 
would  be  sufficiently  inviting  to  make  the  currency  worth  par  of 
specie.  It  would  certainly  be  sufficient  to  attract  much  capital, 
as  every  day’s  observation  attests.  As  a six  per  cent,  stock,  it 
would  stand  on  a par  with  United  States  stocks,  and  State  stocks, 
(hearing  six  per  cent,  interest,)  which  are,  at  nearly  all  times, 
worth  par  of  specie,  and  oftentimes  more  than  par  of  specie,  in 
the  market. 

3.  As  regards  convenience,  the  Productive  Stock  would  be 
equal  to  any  in  the  market ; especially  in  the  hands  of  Secondary 
holders.  It  being  in  shares  of,  say,  one  hundred  dollars  each, 


36 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


and  its  income  (in  the  hands  of  Secondary  holders)  being  pre- 
cisely fixed,  its  value  is  precisely  known.  The  stock  is,  there- 
fore, in  as  merchantable  form  as  capital  can  be  invested  in.  It  is 
in  as  merchantable  form  as  United  States  stocks,  or  State  stocks, 
(bearing  fixed  rates  of  interest,)  which  are  nearly  or  quite  as 
merchantable  as  bank  bills  themselves. 

The  objections,  heretofore  entertained  against  mortgages,  as  an 
investment,  have  no  application  whatever  to  stocks  of  this  kind. 
Those  objections  have  been  as  follows : 

1.  The  inconvenience  of  raakinor  the  investment,  owing  to  the 
necessity  of  investigating  titles,  making  valuations,  &c.,  all  of 
which  processes  are  attended  with  delay,  and  with  some  danger  of 
mistakes  or  frauds.  In  these  bank  stock  mortgages,  these  delays 
and  dangers  would  all  be  avoided ; because  the  soundness  of  the 
titles,  and  the  moderation  of  the  valuations,  would  be  notorious. 
It  would  be  a necessity,  on  the  part  of  the  banks,  to  make  them 
so,  as  a condition  precedent  to  the  banks’  getting  any  circulation 
for  their  currency. 

2.  A second  objection,  to  mortgages  heretofore,  has  been,  that 
each  mortgage  was  in  bulk,  and  could  not  be  broken.  It  was, 
therefore,  in  a great  degree,  an  unmerchantable  article ; because 
it  was  not  always,  nor  even  often,  an  easy  thing  to  find  a person 
wishing  to  make  an  investment  of  that  particular  amount.  This 
objection,  too,  which  was  really  a very  serious  one,  is  entirely 
obviated  in  the  case  of  the  Productive  Stock ; for  here  the 
mortgages  are  divided  into  shares  of  $100,  or  any  other  amount 
that  may  be  desired ; and  thus  put  in  as  merchantable  form,  as 
any  investment  can  possibly  be  in. 

3.  A third  objection,  to  mortgages  heretofore,  has  been,  that 
neither  the  interest  nor  the  principal  of  the  investment  could  be 
realized  from  them  (unless  the  debtor  should  choose  to  pay) 
without  a tedious  delay ; taking  possession  of  the  premises ; 
looking  after  rents  and  profits ; giving  the  mortgagor  time  (per- 
haps a long  time)  for  redemption ; or  incurring  delay,  expense, 
and  trouble  in  advertising  the  premises,  and  selling  them.  In 


PRACTICABILITY  OF  THE  SYSTEM. 


37 


the  case  of  the  Secondary  holders  of  Productive  Stocky  every 
objection  of  this  kind  is  obviated,  for  substantially  the  whole 
resources  of  the  bank  (which  are  morally  certain  to  be  ample) 
are  pledged  to  the  payment  of  the  dividends  promptly.  And 
even  as  to  the  Primary  holders,  they  are  not  likely  to  be  per- 
sonally troubled  in  the  matter,  for  the  Trustees  attend  to  all 
business  matters  in  relation  to  the  mortgages.  The  only  one,  of 
the  inconveniences  just  mentioned,  that  the  Primary  Stock- 
holders are  ever  likely  to  be  subjected  to,  is  a delay  in  receiving 
some  portion  of  their  dividends,  if  the  mortgagors  should  not  be 
prompt  in  the  payment  of  interest.  But  this  would  so  rarely 
occur  as  to  prove  a very  slight  objection,  if  any,  to  the  invest- 
ment. 

The  result,  then,  obviously  would  be,  that  these  stocks  would 
be  of  the  very  first  class,  as  investments.  Their  safety,  their 
profit,  and  their  merchantable  character,  would  all  conspire  to 
make  them  preeminently  desirable.  And  the  consequence  would 
be  that  the  demand  for  them  would  be  sufficient  to  make  the 
currency  constantly  in  demand,  as  a means  of  obtaining  them. 

Under  an  abundant  currency,  such  as  the  system  would  fur- 
nish, and  under  the  low  rates  of  interest  that  would  follow,  the 
Productive  Stock  would  probably  be  much  more  in  demand  than 
stocks,  paying  similar  dividends,  now  are ; because  now,  a very 
large  amount  of  loanable  capital  is  kept  invested  in  promissory 
notes,  and  other  personal  securities,  on  account  of  their  paying  a 
better  interest  than  stocks.  But  under  the  system  proposed,  the 
banks  would  be  so  numerous,  and  the  rate  of  interest  at  them  so 
low,  that  temporary  loans  would  all  be  obtained  at  the  banks, 
rather  than  in  the  street ; and  the  capital,  which  is  now  loaned 
in  the  street,  would  then,  as  the  best  alternative,  seek  investment 
in  bank  stocks. 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


Fourthly. 

The  next  question  is,  would  the  paper  currency  proposed, 
maintain  a par  value  with  specie  ? 

This  question  has  already  been  discussed  somewhat;  but  a few 
more  words  need  to  be  said. 

We  have  already  seen  that  the  paper  would  cii’culate,  at  its 
true  value,  xvhatever  that  might  he.  It  is,  nevertheless,  an 
important  question,  whether  its  value,  in  the  market,  would  be 
equal  to  that  of  specie  ? 

The  answer  is,  that  if  the  rate  of  dividend,  paid  to  Secondary 
holders  of  Productive  Stock,  should  be  six  per  cent.,  that  would 
be  sufficient  to  make  the  currency,  at  most  times,  if  not  at  all 
times,  worth  par  of  specie.  If  it  should  not  be  at  all  times,  it 
would  be  because  the  market  value  of  specie  would  fluctuate 
more  than  that  of  the  paper  ; thereby  proving  that  the  paper  was 
the  most  uniform  standard  of  value. 

The  paper  currency  could  never  rise  above  the  value  of  specie ; 
because  the  banks  would  have  the  right  to  redeem  theii’  circula- 
tion with  specie,  if  they  should  so  please. 

If,  therefore,  there  should  ever  be  a difierence  .between  the 
value  of  the  paper,  and  that  of  specie,  it  must  be  either  because 
the  specie  would  stand  constantly  above  the  paper,  or  because  it 
would  occasionally  rise  above  it. 

Whether  the  value  of  specie  would  stand  constantly  above 
that  of  the  paper,  would  depend  upon  the  rate  of  dividend 
secured  to  the  Secondary  holders  of  the  Productive  Stock.  If 
this  rate  should  be  six  per  centum,  that  would  certainly  be  suffi- 
cient to  make  the  currency  worth  as  much  as  specie,  at  times  ; 
because  there  are  times,  when  there  is  plenty  of  specie  to  be 
loaned  at  that  rate. 

The  only  remaining  question,  then,  is,  whether  the  specie 
would  occasionally  rise  in  value  above  the  paper  ? The  answer 
is,  that  it  would  very  rarely,  if  ever ; and  for  this  reason,  viz. : 


PRACTICABILITY  OP  THE  SYSTEM. 


39 


that  the  supply  of  paper  would  always  be  so  abundant  and  con- 
stant, that  it  is  probable,  if  not  certain,  that  none  of  those 
scarcities  or  contractions,  in  the  currency,  which  alone  cause  a 
rise  in  the  price  of  specie,  would  ever  occur.  And  if  they  never 
should  occur,  the  paper  would  always  be  on  a par  with  specie. 
If,  however,  the  specie  should  ever  stand  above  the  paper,  that 
would  only  prove,  not  that  the  paper  had  fallen,  but  that  the 
specie  had  risen.  In  other  words,  it  would  prove  that  the  fluctu- 
ation was  in  the  specie,  and  not  in  the  paper ; and,  consequently, 
that  the  paper  was  the  least  variable  standard  of  value. 

Under  these  circumstances,  the  paper  would  constitute  nearly 
all  the  currency  in  circulation  (unless  for  sums  below  one  dollar). 
It  would  be  the  only  currency  loaned  by  the  banks.  It  would  be 
a legal  tender  in  payment  of  all  debts  due  the  banks.  And  it 
would  be  sufficient  for  all  cash  purchases  and  sales  between  man 
and  man.  And  if  an  individual  should  want  specie  for  any 
extraordinary  purpose  — as,  for  exportation,  for  example  — he 
would  buy  the  specie  as  merchandize,  paying  the  difference 
between  that  and  the  paper. 

Still,  specie  would  probably,  at  all  times,  be  more  abundant, 
as  a currency,  in  proportion  to  the  demand,  than  it  is  now ; 
because  it  would  be  so  much  less  needed.  The  supply  would  be 
greater,  in  proportion  to  the  demand,  than  now,  because  the 
greater  supply  of  paper  would  supersede  the  necessity  for,  and 
the  use  of,  specie,  as  a currency. 

If  the  proposed  paper  currency  should  be  introduced  through- 
out the  world,  (as  it  sooner  or  later  would  be,  if  found  to  be 
essentially  better  than  any  other  system.)  the  coins  would  become 
superabundant,  unless  a greater  proportion  of  them  should  be 
consumed  in  the  arts,  than  now.  And  gold  and  silver,  whether 
in  coin  or  not,  if  they  now  stand  above  their  value  for  uses  in  the 
arts,  would  fall  to  that  value,  and  there  remain,  as  they  ought. 


40 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


Fifthly. 

Could  the  proposed  system  be  introduced  in  competition  with 
the  existing  system  ? 

Yes,  for  various  reasons,  as  follows-:  — 

1.  The  proposed  sj'stem  would  meet  with  no  material  opposi- 
tion from  any  quarter,  unless  from  the  stockholders  in  the 
existing  banks.  Would  it  from  them?  No;  because  it  would 
probably  subserve  the  interests  of  four  fifths,  or  nine  tenths,  of 
them,  better  even  than  the  existing  system.  Let  us  see. 

The  stockholders  of  the  present  banks  are  made  up  of  two 
classes,  viz. : those  who  hold  their  stock  in  order  to  lend  money, 
and  those  who  hold  it  in  order  to  borrow  money. 

Both  of  these  classes  would  jv'obabhj  be  benefitted,  rather  than 
injured,  by  the  adoption  of  the  new  system. 

Those,  who  have  money  to  lend,  could  probably  do  better  with 
it,  by  investing  it  first  in  a mortgage,  and  thus  getting  one  income 
from  it ; and  then  using  the  mortgage  as  hank  capital,  and  thus 
getting  another  income  from  it. 

Their  capital  would  thus  be  more  safely  invested  than  it  is 
now ; and  would  probably  yield  a larger  income. 

Those,  who  own  bank  stock,  in  order  to  borrow  more  than  they 
lend,  would  probably  do  better  than  they  do  now,  because,  first, 
they  would  keep  their  own  capital  wholly  in  their  own  business ; 
and,  secondly,  if  they  needed  more,  wmuld  easily,  borrow  it  (if 
worthy  of  credit)  on  account  of  the  abundance  of  banks,  that 
would  be  seeking  borrowers.  Thus  they  would  be  as  well  sup- 
plied with  capital  as  now,  and  with  less  risk  and  trouble ; because 
they  would  borrow  only  Avhat  they  needed  over  and  above  their 
own  capital ; and  this  they  would  do  directly,  and  without  com- 
plicating their  business,  as  now,  with  that  of  a bank,  by  becoming 
stockholders,  and  being  compelled  to  look  after,  and  take  the 
risks  of,  all  the  business  of  the  bank. 


PRACTICABILITY  OF  THE  SYSTEM. 


41 


Another  reason,  why  the  stockholders  in  the  present  banks 
would  be  benefitted  by  the  new  system,  is,  that  very  many  of 
tlfese  stockholders  are  large  owners  of  real  estate.  The  new 
system,  by  enabling  the  owners  of  real  estate  to  get  an  income 
from  it,  as  banking  capital,  and  still  more  by  furnishing  increased 
facilities  for  agriculture,  manufactures,  and  commerce,  would 
greatly  inctease  the  value  of  real  estate  in  general.  This  in- 
creased value,  given  to  real  estate,  would  be  of  more  importance 
to  the  owners  thereof,  than  any  income  or  advantage,  derived  by 
them  from  the  present  system  of  banking,  over  those  to  be 
derived  from  the  proposed  system. 

The  opposition  to  the  new  systetn,  then,  (if  any  there  should 
be,)  on  the  part  of  stockholders  in  the  present  banks,  would  be 
an  opposition  of  prejudice,  and  not  of  interest;  for  there  are  few 
or  no  stockholders  in  the  present  banks,  who  would  not  derive 
greater  advantages  from  the  new  system,  than  from  the  present 
one. 

2.  The  new  currency  could  be  introduced  (brought  into  circu- 
lation) in  competition  with  the  existing  paper  currency,  for  the 
further  reason,  that,  if  the  existing  banks  should  receive  the 
currency  of  the  new  banks,  at  par,  the  currency  of  the  new 
banks  would  thus  be  enabled  to  circulate,  in  the  community,  on  a 
par  with  that  of  the  present  banks.  On  the  other  hand,  if  the 
present  banks  should  not  receive,  at  par,  the  currency  of  the 
new  banks,  the  new  banks  and  their  friends  would  systematically, 
and  to  the  extent  of  their  ability,  run  upon  the  existing  banks 
for  specie ; and  thus  compel  them  to  suspend  payments  in  specie. 
And  when  the  existing  banks  should  have  suspended  payment  in 
specie,  the  new  banks  would  stand  better  than  the  present  ones, 
in  the  estimation  of  the  community ; because  the  existing  banks 
would  then  offer  no  redemption  of  their  bills,  except  by  receiving 
them  in  payment  of  debts ; whereas  the  new  banks  would  not 
only  offer  that  redemption,  but  also  a farther  redemption  in 
Productive  Stock. 

If  the  new  banks,  and  their  friends,  should  systematically  run 

6 


42 


A NEW  SYSTEM  OP  PAPER  CURRENCy, 


upon  the  existing  banks  for  specie,  the  existing  banks  could  not 
retaliate ; because  the  new  banks  could  redeem  with  Productive 
Stock,  instead  of  specie,  if  they  should  so  choose. 

Thus  the  new  banks,  by  drawing  specie  from  the  existing 
banks,  could  pay  specie,  to  the  ’public,  as  long  as  the  existing 
banks  could  pay  it ; and  thus  the  new  banks  would  put  them- 
selves on  a par  with  the  existing  banks,  so  far  as  paying  specie, 
to  the  j)ublic,  should  be  concerned.  But  the  difference  between 
them  would  be,  that  the  present  banks  would  be  compelled  to  pay 
specie  to  the  new  banks ; but  the  new  banks  would  not  be  com- 
pelled to  pay  specie  to  the  existing  banks. 

This  advantage,  which  the  new  banks  would  have  over  the 
existing  ones,  would  enable  the  new  banks  to  coerce  the  existing 
ones,  either  into  a suspension  of  specie  payments,  (when  the  new 
ones  would  stand  better  than  their  rivals,)  or  else  into  receiving 
the  currency  of  the  new  banks  at  par  — in  which  case  the  new 
banks  would  stand  at  least  as  well  as  the  existing  ones. 

3.  The  new  banks  would  have  an  advantage  over  the  existing 
ones,  in  introducing  their  currency  into  circulation,  by  reason  of 
the  fact  that,  inasmuch  as  their  capital  would  cost  them  nothing, 
(they  not  being  obliged  to  keep  any  considerable  amount  of  specie 
on  hand,)  they  would  be  able  to  lend  money  at  a lower  rate  of 
interest. 

4.  The  currency  of  the  new  banks  would  go  into  circulation, 
for  the  further  reason,  that  every  body  would  prefer  it,  (the  cur- 
rency,) on  account  of  its  superior  safety,  convenience,  and 
merchantable  character,  to  the  credit  of  private  persons.  This 
preference  would  be  sufficient  to  bring  it  into  use  in  substantially 
all  those  purchases  and  sales,  which  are  now  made  on  credit. 
And  if  the  currency  were  to  go  into  use  only  to  that  extent,  it 
would  be  a success.  But  if  it  were  to  go  into  use  to  that  extent, 
it  would  obviously  go  into  use  to  a still  greater  extent,  and  super- 
sede, wholly  or  partially,  the  existing  currency,  even  in  those 
purchases  and  sales,  which  are  now  made  for  cash. 

Doubtless  nine  tenths,  and  perhaps  nineteen  twentieths,  of  all 


PRACTICABILITY  OP  THE  SYSTEM. 


43 


the  persons,  who  now  get  credit,  get  it  elsewhere  than  at  the 
banks ; in  fact,  never  go  to  a bank  for  credit.  Yet  these  persons 
are  worthy  of  credit,  as  is  proved  by  the  fact  that  they  get  it  of 
private  persons,  by  purchasing  commodities  on  credit.  It  would 
be  far  better  for  them  to  get  their  credit  at  bank,  and  make  their 
purchases  for  cash,  for  they  would  then  make  them  much  more 
advantageously.  All  this  class  of  persons,  therefore,  could  be 
relied  on  to  introduce  the  new  currency.  And  they  would  have 
no  difficulty  in  introducing  it — that  is,  in  making  their  purchases 
with  it  — because  it  would  be  preferred  to  their  private  credit, 
even  by  those  who  now  give  them  ci’edit. 

5.  Under  the  existing  system,  when  the  banks  suspend  specie 
payments,  we  see  that  their  bills  not  only  continue  to  circulate, 
but  that  they  maintain  a value,  in  the  market,  very  nearly  on  a 
par  with  specie.  Why  is  this  ? It  is  principally,  if  not  solely, 
because  the  bills  of  each  bank  are  a legal  tender  in  payment  of 
any  debts  due  to  that  bank.  Inasmuch  as  the  public  always  owe 
a bank  more  (by  the  amount  of  interest  on  loans)  than  the  bank 
owes  the  public,  there  is  sure  to  be  a demand  for  all  the  outstand- 
ing bills  of  a bank,  to  pay  the  debts  due  to  the  bank  — provided 
the  debts  due  to  the  bank  be  solvent.  It  is  this  fact,  that  keeps 
the  bills  of  the  bank  so  nearly  on  a par  with  specie.  That  is,  the 
bills  are  worth  very  nearly  dollar  for  dollar,  because  they  will 
pay  debts  to  the  banks,  dollar  for  dollar,  vdiich  icould  other- 
wise have  to  be  paid  in  specie. 

This  fact,  in  regard  to  the  circulation  of  the  bills  of  suspended 
banks,  under  the  existing  system,  sufficiently  demonstrates  that 
the  paper  currency  now  proposed,  would  not  only  circulate,  but 
that  it  would  maintain  a value  very  nearly,  if  not  quite,  on  a par 
with  specie ; because  it  would  not  only  be  a legal  tender,  dollar 
for  dollar,  for  all  debts  due  to  the  banks,  but  would  also  be 
redeemable  in  Productive  Stock,  which  would  always  maintain, 
very  nearly  or  quite,  a par  value  with  specie,  in  the  market.  In 
this  latter  respect  (of  being  redeemable  by  Productive  Stock') 
the  proposed  currency  would  have  a clear,  and  very  important, 


44 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


advantage  over  the  bills  of  suspended  banks,  wbich  now  circulate, 
and  maintain  their  value  nearly  on  a par  with  specie.  There  is, 
therefore,  no  ground  for  saying  that  the  new  currency  would  not 
circulate,  if  it  were  offered,  when  we  see  that  a far  less  safe,  less 
redeemable,  and  less  desirable  currency,  to  wit,  the  hills  of  sus- 
pended banks,  under  the  present  system,  do  not  only  circulate, 
but  maintain  their  value  so  nearly  on  a par  with  specie. 

6.  It  may  be  supposed,  at  first  view,  that  merchants,  especially 
importers,  might  reasonably  object  to  the  proposed  currency,  on 
the  ground  that  their  interests  require  that  the  currency  of  a 
nation  be  such  as  can  be  converted  into  specie,  whenever  they 
(the  merchants)  may  have  occasion  to  export  specie. 

Admitting,  for  the  sake  of  the  argument,  that  the  merchants 
might  suffer  some  inconvenience  of  this  kind,  the  effect  would 
only  be  to  make  them  more  careful  to  keep  the  imports  within 
the  exports  of  the  country.  And  this  benefit  to  the  country 
would  counterbalance  a thousand  fold  any  inconvenience  to  the 
merchants. 

The  merchants  have  no  claim  that  the  whole  country  shall 
depend,  for  a currency,  upon  a commodity,  or  commodities,  like 
gold  and  silver,  which  the  merchants  can  at  pleasure  carry  out  of 
the  country,  leaving  the  nation  destitute  of  a currency.  And  it 
is  nothing  but  suicide  for  a people  to  depend  upon  such  commodi- 
ties for  a currency. 

Under  the  present  system,  whenever  the  balance  of  trade  is 
much  against  us,  the  merchants  export  specie  in  such  quantities 
as  to  cause  sudden  and  severe  contractions  in  the  currency,  a 
great  reduction  in  the  price  of  commodities  relatively  to  specie, 
(that  is,  a great  rise  in  the  price  of  specie,)  general  bankruptcy 
among  persons  in  debt,  general  stagnation  in  industry  and  trade, 
and  immense  distress  and  ruin  on  every  hand.  This  state  of 
things  checks  importations  for  a while,  until  the  balance  of  trade 
turns  in  our  favor ; when  the  specie  returns,  currency  expands, 
credit  revives,  industry  and  trade  become  active,  and,  for  a time, 
we  have  what  we  call  prosperity.  But  in  a few  years,  the 


PRACTICABILITY  OF  THE  SYSTEM. 


45 


merchants  again  export  the  specie,  and  the  same  catastrophe  is 
acted  over  again.  And  such  must  continue  to  he  our  experience, 
until  our  present  vicious  system  of  currency  and  credit  shall  be 
corrected.  This  no  one  seems  to  doubt. 

Certainly  such  evils  are  not  to  be  endured  by  a whole  nation, 
from  no  motive  but  to  maintain  a currency,  which  the  merchants 
can  export,  whenever  they  shall  have  imported  more  goods  than 
the  legitimate  exports  of  the  country  will  pay  for. 

It  is  the  proper  fnijction  of  merchants  to  conform  their  business 
to  the  interests  of  the  people,  in  the  matter  of  currency,  as  much 
as  in  the  commodities  bought  and  sold  with  and  for  it.  And  it 
would  be  as  legitimate  for  the  merchants,  instead  of  supplying 
the  people  with  such  commodities  as  the  latter  desire,  to  dictate 
to  them  what  they  may,  and  may  not,  buy,  as  it  is  for  them  (the 
merchants)  to  dictate  to  the  people  what  currency  the  latter 
shall  use. 

It  is  the  legitimate  function  of  merchants  to  buy  such  com- 
modities as  the  people  have  to  sell,  and  to  sell  such  as  the  people 
wish  to  buy.  So  far  as  merchants  do  this,  they  are  a useful 
class.  And  the  principle  applies  as  well  to  the  currency,  that  is 
to  be  bought  and  sold,  as  to  any  other  commodities.  And,  as 
matter  of  fact,  whatever  this  principle  requires  of  merchants, 
they  readily  acquiesce  in.  They  adapt  themselves  at  once  to  any 
system  of  currency,  that  happens  to  prevail  for  the  time  being. 
And  certainly  no  class  will  more  eagerly  welcome  any  system  of 
banking,  that  will  furnish  them,  at  all  times,  with  abundant 
credit,  and  abundant  currency,  and  cash  payments  in  trade ; for 
such  a system  would  be  a guaranty,  to  them,  of  a safe,  constant, 
and  profitable  trafiic,  in  the  place  of  the  present  fitful,  chaotic, 
and  perilous  one,  in  which  so  many  of  their  number  are  being 
continually  wrecked. 

So  far  as  the  export  of  specie  is  concerned,  probably  not  one 
merchant  in  a hundred  — perhaps  not  one  in  a thousand  — has 
the  least  interest  in  it.  A currency,  that  will  pay  their  bank 
notes,  is  substantially  all  that,  as  a class,  they  demand,  or  desire. 


46 


A NEW  SYSTEM  OF  PAPEB  CURRENCY. 


But,  in  truth,  the  system  would  favor,  instead  of  injuring,  the 
interests  even  of  those  few  merchants  who  occasionally  do  export 
specie ; for  it  would  put  at  their  disposal  nearly  all  the  gold  and 
silver  of  the  country,  for  exportation,  or  any  other  purpose. 
That  is  to  say,  the  merchants  could  export  nearly  all  the  gold 
and  silver,  without  affecting  our  home  currency ; and  conse- 
quently without  disturbing  industry  and  trade.  And  this  is  one 
of  the  great  merits  of  the  system.  The  presence  or  absence  of 
specie  in  the  country  would  not  be  known  by  its  effects  upon  the 
general  body  of  currency. 

If  the  paper  currency,  now  proposed,  were  introduced  through- 
out the  world,  gold  and  silver  would  enter  very  little  into  the 
internal  commerce  of  nations.  They  would  go  back  and  forth 
between  nations,  to  settle  balances ; and  would  be  found,  in  large 
quantities,  in  seaports  as  merchandize.  And  merchants  would 
purchase  them  for  export,  as  they  would  any  other  commodities. 

7.  The  system  proposed  would  obviously  tend  to  the  concen- 
tration of  specie,  in  large  quantities,  in  the  seaports.  This  would 
enable  the  banks,  in  the  seaports,  to  pay  specie,  if  it  should  be 
at  all  necessary.  And  this  would  enable  the  banks,  in  the 
seaports,  to  furnish  a specie  paying  currency  for  the  interior  of 
the  country^  when  the  banks  themselves,  in  the  interior,  would 
not  pay  it.  The  advantage  of  circulation,  which  the  seaport 
banks  might  thus  obtain  over  the  banks  of  the  interior,  would  be 
great  enough  to  compensate  for  any  little  trouble  it  might  be  for 
the  former  to  pay  specie.  In  fact,  this  interior  circulation  might 
very  probably  become  so  extensive,  as  to  be  a source  of  great 
profit  to  the  seaport  banks. 

If  the  seaport  banks  should  send  their  currency,  in  large 
quantities,  into  the  interior,  the  banks  of  the  interior  would  have 
little  need  to  redeem  their  currency  with  specie.  It  would  be 
sufficient  for  them  to  redeem  it  with  the  seaport  currency. 

8.  The  system  is  practicable  for  the  further  reason,  that  it  can 
be  introduced  without  the  aid  of  hank  charters,  or  special  legisla- 
tion of  any  kind.  It  stands  wholly  on  common  law  principles  ; 


PRACTICABILITY  OF  THE  SYSTEM. 


47 


and  companies  can  go  into  business  under  it  — as  they  go 
into  mercantile,  manufacturing,  or  any  other  business  — when  it 
suits  their  interest  or  pleasure,  without  asking  the  consent  of  a 
body  of  ignorant,  conceited,  tyrannical  legislators,  who  assume  to 
know  what  business  it  is,  and  what  business  it  is  not,  best  for  men 
to  engage  in ; instead  of  leaving  the  wants  of  mankind  to  give 
direction  to  their  industry  and  capital. 

The  banks,  too,  when  established,  would  be  free  of  all  special 
control,  oversight,  taxation,  or  interference  by  the  government. 
As  the  banks  would  ask  no  favors  of  the  government,  in  the  way 
of  charters,  monopolies,  or  otherwise,  the  government  would  have 
no  more  excuse  for  specially  taxing  them,  or  for  sending  Com- 
missioners to  pry  into,  investigate,  or  report  their  aflfairs,  than  it 
now  has  for  specially  taxing  the  capital,  or  for  sending  Commis- 
sioners to  pry  into,  investigate,  or  report  the  affairs,  of  merchants, 
manufacturers,  or  any  other  class  of  persons. 

The  fact,  that  the  existing  system  requires  special  legislation 
in  favor  of  the  banks,  (in  the  shape  of  charters  and  monopolies,) 
and  special  legislation  against  them,  (in  the  shape  of  restrictions 
of  various  kinds,  the  espionage  of  Commissioners,  &c.,  &c.,) — in 
short,  the  fact,  that  the  banking  business  cannot  be  left  subject 
only  to  those  general  laws,  which  are  applicable  to  all  other  kinds 
of  business,  is  sufficient  evidence  that  the  system  is  a vicious  one, 
and  ought  to  be  abolished. 


48 


A NEW  SYSTEM  OP  PAPER  CURRENCY. 


CHAPTER  V. 

LEGALITY  OF  THE  SYSTEM. 

Admitting,  for  the  sake  of  the  argument  — what  is  not  true 
in  fact  — that  the  State  governments  have  constitutional  power  to 
forbid  private  banking,  their  statutes  for  that  purpose,  being 
contrary  to  natural  right,  must  be  construed  to  the  letter ; and 
the  letter  of  few,  if  any,  of  them  is  such  as  to  prohibit  the 
system  here  proposed. 

Thus  Maine  prohibits  “ any  drafts,  bills,  or  promissory  notes, 
or  other  evidences  of  debt.” 

New  Hampshire  prohibits  “ bills,  notes,  checks,  drafts,  or 
obligations.” 

Massachusetts  prohibits  “any  note,  bill,  order,  or  check.” 
Rhode  Island  prohibits  “any  note,  bill,  order,  or  check.” 
Connecticut  prohibits  “any  bill  of  credit,  bond,  promissory 
writing,  or  note,  bill  of  exchange,  or  order.” 

New  York  prohibits  “notes,  or  other  evidences  of  debt.” 

New  Jersey  prohibits  “bills,  notes,  or  other  evidences  of 
debt.” 

Pennsylvania  prohibits  “ any  promissory  note,  ticket  or  engage- 
ment of  credit  in  the  nature  of  a bank  note.” 

Ohio  prohibits  “any  note,  bill,  or  other  evidence  of  debt.” 
Michigan  prohibits  “any  bills,  notes,  due  bills,  drafts,  or  other 
evidences  of  debt.” 

Illinois  prohibits  “any  note,  or  bill.” 

Wisconsin  pi’ohibits  “any  bills,  or  promissory  notes,  or  other 
evidences  of  debt.” 

Mississippi  prohibits  “notes,  bills,  certificates  of  deposit,  or 
evidences  of  debt.” 


LEGALITY  OP  THE  SYSTEM. 


49 


Georgia  prohibits  “ any  bills,  or  promissory  notes  of  private 
bankers.” 

The  currency  proposed  — the  Circulating  Stock  — comes 
within  the  letter  of  none  of  these  prohibitions.  It  consists 
neither  of  “notes,”  “promissory  notes,”  “orders,”  “checks,” 
“drafts,”  “bonds,”  “certificates  of  deposit,”  “bills  of  credit,” 
“ bills  of  exchange,”  “due  bills,”  nor  “tickets  or  engagements 
of  credit  in  the  nature  of  bank  notes.” 

Although,  if  it  should  come  into  circulation,  it  may,  very 
likely,  in  common  parlance,  and  from  motives  of  convenience, 
be  denominated  “bills,”  yet  it  is  not  “bills,”  in  any  legal  sense, 
in  which  that  word  was  used  at  the  times  these  statutes  were 
enacted. 

It  cannot  be  called  “evidences  of  debt” — that  is,  of  personal 
indebtedness  — in  the  sense,  in  which  this  description  is  evidently 
used  in  these  statutes. 

It  is  not  an  “ obligation,”  in  the  sense,  in  which  that  word  is 
legally  used.  That  is  to  say,  it  is  not  a personal  “obligation,” 
in  the  nature  of  a debt,  as  the  term  debt  is  now  understood. 

It  is,  in  law,  simply  hona  fide  certificates  of  bona  fide  stocks  ; 
as  really  so  as  are  any  certificates  of  railroad  stocks,  or  of  any 
other  stocks  whatever.  It  is  bona  fide  certificates  of,  or  evidences 
of  title  to,  veritable  property  in  land,  as  really  so,  as  are  deeds, 
mortgages,  leases,  or  any  other  written  instruments  for  the 
conveyance  of  title  to,  or  rights  in,  real  estate.  As  such,  it 
obviously  comes  within  the  letter  of  none  of  the  preceding 
prohibitions.  The  holders  of  the  certificates  are  the  bona  fide 
owners  of  the  stocks,  or  property  represented ; and  in  selling  the 
stocks  themselves,  they  pass  the  certificates,  or  evidences  of  title. 
And  this  is  the  whole  matter,  in  a legal  point  of  view. 

The  statutes,  however,  of  some  of  the  States  are  in  somewhat 
different  terms  from  those  already  cited. 

Thus  Vermont  prohibits  “ any  bill  of  credit,  bond,  promissory 
writing  or  note,  bill  of  exchange,  order,  or  other  paper?'' 

Whether  this  prohibition  of  “ any  other  paper as  a currency, 

7 


60 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


can,  in  law,  be  held  to  prohibit  the  sale  of  bona  fide  stocks,  or 
property  in  land,  and  passing  the  certificates  thereof,  or  the  titles 
thereto,  is,  to  say  the  least,  very  doubtful. 

New  Jersey,  in  addition  to  the  preceding  prohibition  of  “bills, 
notes,  or  other  evidences  of  debt,”  prohibits  “ any  ticket  of  any 
denomination  whatever,  intended  to  circulate  for  the  payment  of 
debts,  dues,  or  demands,  in  lieu  of,  or  as  a substitute  for,  bank 
notes  or  bills,  or  other  lawful  currency  of  the  State.” 

What  may  be  the  legal  meaning  of  a “ ticket  we  will  not 
now  undertake  to  settle ; nor  whether  this  prohibition  interdicts 
the  sale  of  bona  fide  stocks,  and  the  transfer  of  the  paper  titles 
thereto. 

Virginia  prohibits  “any  note,  or  other  security,  purporting 
that  money  or  other  thing  of  value  is  payable  by,  or  on  behalf 
of,  such  person”  (the  person  issuing). 

This  statute  clearly  would  not  interdict  the  currency  proposed. 

The  letter  of  the  statutes  of  Missouri,  Kentucky,  Tennessee, 
Alabama,  North  Carolina,  and  of  the  constitution  of  Texas,  is, 
perhaps,  comprehensive  enough  to  prohibit  the  proposed  cur- 
rency. 

In  the  statutes  of  Indiana,  Iowa,  Arkansas,  Maryland,  and 
Delaware,  I have  found  nothing,  that  seemed  to  me  to  prohibit 
the  proposed  currency. 

If  this  currency  should  evade  the  interdict  of  these  statutes 
against  private  banking,  it  would  also  evade  the  interdict  of  the 
State  laws  against  usury ; for  the  issue  of  the  currency  by  the 
banks,  in  exchange  for  the  promissory  notes  of  individuals,  is,  in 
law,  a mere  sale  of  bona  fide  stocks,  or  property,  on  credit,  like 
the  sale  of  any  other  stocks,  or  property,  on  credit,  and  at  a 
price  agreed  on.  And  if  these  stocks  should  happen  to  sell  for 
more  than  their  nominal  value,  that  would  be  a matter  of  no 
more  legal  importance  than  for  railroad  shares  to  sell  for  more 
than  their  par  or  nominal  value. 

But;  admitting  that  the  language  of  all  the  foregoing  prohibi- 
tions are  suflBciently  comprehensive  to  embrace  the  currency 


LEGALITY  OE  THE  SYSTEM. 


51 


proposed,  the  statutes  themselves,  so  far  as  they  should  be  applied 
to  that  currency,  would  nearly  all  of  them  he  unconstitutional 
and  void,  as  being  in  conflict  with  the  “natural  right  to  acquire 
and  dispose  of  property ; ” a right,  that  is  either  expressly  or 
impliedly  recognized  and  guaranteed  by  most,  or  all,  of  the 
State  constitutions,  and  bills  of  rights.  This  “natural  right  to 
acquire  and  dispose  of  property,”  includes  a right  to  buy  and 
sell,  as  well  as  to  produce  and  give  away,  property.  The  issuing 
of  the  currency  proposed,  and  the  passing  of  it,  from  hand  to 
band,  as  a currency,  would,  in  law,  be  merely  a buying  and 
selling  of  the  property  it  should  represent  — that  is  to  say,  the 
buying  and  selling  of  hona  fide  property  in  land  — like  any 
other  property.  The  only  difierence  between  it  and  other  prop- 
erty, would  be,  that  it  would  be  bought  and  sold  more  frequently 
than  other  property. 

But  not  only  all  these  State  laws  against  private  banking,  but 
all  State  laws  against  usury,  and  all  other  laws  whatsoever,  that 
assume  either  to  prohibit,  invalidate,  or  impair  any  contract  what- 
soever, that  is  naturally  just  and  obligatory,  are  unconstitutional 
and  void,  as  being  in  conflict  with  that  provision  of  the  constitu- 
tion of  the  United  States,  which  declares  that  “no  State  shall 
pass  any  law  impairing  the  obligation  of  contracts.” 

This  provision  does  not  designate  what  contracts  have,  and 
what  have  not,  an  “ obligation.”  It  leaves  that  point  to  be  ascer- 
tained, as  it  necessarily  must  be,  by  the  judicial  tribunals,  in  the 
case  of  each  contract  that  comes  before  them.  But  it  clearly 
implies  that  there  are  contracts  that  have  an  “ obligation.”  Any 
State  law,  therefore,  which  declares  that  such  contracts  shall  have 
no  obligation^  is  plainly  in  conflict  with  this  provision  of  the 
constitution  of  the  United  States. 

This  provision  also,  by  implying  that  there  are  contracts,  that 
have  an  “ obligation,”  implies  that  men  have  a right  to  enter  into 
them ; for  if  men  had  no  right  to  enter  into  the  contracts,  the 
contracts  themselves  would  have  no  obligation. 

This  provision,  then,  of  the  constitution  of  the  United  States, 


52 


A NEW  SYSTEM  OF  PAPEB  CURRENCY. 


not  only  implies  that  certain  contracts  have  an  obligation,  but  it 
also  implies  that  the  people  have  the  right  to  enter  into  all  such 
contracts,  and  have  the  benefit  of  them.  And  any  State  laY", 
conflicting  with  either  of  these  implications,  is  necessarily  uncon- 
stitutional and  void. 

Furthermore,  the  language  of  this  provision  of  the  constitution, 
to  wit:  “the  obligation  [singular]  of  contracts”  [plural],  implies 
that  there  is  one  and  the  same  obligation'’'’  to  all  ’■'■con- 
tracts ” whatsoever^  that  have  any  legal  obligation  at  all. 
And  there  obviously  must  be  some  one  principle,  that  gives 
validity  to  all  contracts  alike,  that  have  any  validity. 

The  law,  then,  of  this  whole  country,  as  established  by  the 
constitution  of  the  United  States,  is,  that  all  contracts,  in  which 
this  one  principle  of  validity  or  “obligation  ” is  found,  shall  he 
held  valid ; and  that  the  States  shall  impose  no  restraints  upon 
the  people’s  entering  into  all  such  contracts. 

All,  therefore,  which  courts  have  to  do,  in  order  to  determine 
whether  any  particular  contract,  or  class  of  contracts,  are  valid, 
and  whether  the  people  have  a right  to  enter  into  them,  is  simply 
to  determine  whether  the  contracts  themselves  have,  or  have  not, 
this  one  principle  of  validity,  or  obligation,  which  the  constitu- 
tion of  the  United  States  declares  shall  not  be  impaired. 

State  legislation  can  obviously  have  nothing  whatever  to  do 
with  the  solution  of  this  question.  It  can  neither  create,  nor 
destroy,  that  “obligation  of  contracts,”  which  the  constitution 
forbids  it  to  impair.  It  can  neither  give,  nor  take  away,  the 
right  to  enter  into  any  contract  whatever,  that  has  that  “ obliga- 
tion.” 

But  here  a formidable  difficulty  arises.  It  is  no  less  a one 
than  this,  viz. : that  neither  legislatures,  lawyers,  nor  coufts, 
know,  nor  even  pretend  to  know,  what  “the  obligation  of  con- 
tracts” is.  That  is  to  say,  there  is  no  one  2^rinciple,  known  or 
recognized  among  them,  by  reference  to  which  the  validity  or 
invalidity  of  all  contracts  is  determined.  Consequently  it  is  not 
known,  in  the  case  of  any  single  contract  whatever,  that  is  either 


LEGALITY  OF  THE  SYSTEM. 


53 


enforced  or  annulled,  in  a court  of  justice,  whether  the  adjudica- 
tion has  really  been  in  accordance  with  “the  obligation”,  of  the 
contract,  or  not.  Startling,  and  almost  terrifying,  as  this  state- 
ment is,  in  view  of  the  number  and  importance  of  the  contracts, 
in  which  men’s  rights  are  involved,  and  which  courts  are  con- 
tinually annulling  or  enforcing,  the  statement  is  nevertheless 
true. 

The  question  — what  is  “the  obligation  of  contracts?”  has 
been  several  times  before  the  Supreme  Court  of  the  United 
States ; but  has  never  received  any  satisfactory  answer.  The 
last  time  (so  far  as  I know)  that  it  was  brought  before  that  court, 
was  in  1827,  in  the  case  of  Ogden  vs.  Saunders  (12  Wheaton, 
213).  Several  among  the  most  eminent  lawyers  in  the  country, 
to  wit:  Webster,  Wirt,  Wheaton,  Livingston,  Ogden,  Jones,  and 
Sampson,  were  engaged  in  the  cause.  But  they  all  failed  to 
enlighten  the  court. 

The  court  consisted,  at  that  time,  of  seven  judges.  Among 
these  5e^Je?^  judges, /o^^r  different  opinions  prevailed  as  to  what 
“ the  obligation  of  contracts  ” was.  Three  of  the  judges  said  it 
was  one  thing  ; two  of  them  said  it  was  another ; one  said  it  was 
another;  and  one  said  it  was  another.  No  one  opinion  com- 
manded the  assent  even  of  a majority  of  the  court.  And  thus 
the  court  virtually  confessed  that,  as  a court,  they  did  not  know 
what  “the  obligation  of  contracts  ” was. 

The  reasonable  presumption  is,  that  no  one  of  these  opinions 
was  correct ; for  if  either  had  been  correct,  it  would  have  been 
likely  to  secure  the  assent  of  the  whole  court,  or  at  least  of  a 
majority. 

But,  although  the  court  could  not  agree  as  to  what  the  obliga- 
tion of  contracts  was,  four  of  the  justices  did  agree  in  declaring 
that  the  insolvent  law  of  New  York  did  not  impair  the  obligation 
of  any  contracts,  that  were  made,  in  New  York,  subsequently  to 
the  passage  of  the  law.  To  appreciate  the  farcical  character  of 
this  conclusion,  we  have  only  to  consider  that,  among  these  four 
justices,  three  different  opinions  prevailed  as  to  what  “the  obli- 


54 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


gation”  was,  which  they  said  the  law  did  not  impair.  And  from 
that  time  until  now,  this  ridiculous  opinion  of  these  four  justices, 
who  virtually  confessed  that  they  knew  nothing  of  the  question 
they  assumed  to  decide,  has  stood  as  law  throughout  the  country, 
and  been  received,  by  legislatures  and  courts,  as  sufficient 
authority  for  the  State  legislatures  to  fix,  prescribe,  alter,  nullify, 
or  impair,  at  their  discretion,  the  obligation  of  any  and  all  con- 
tracts entered  into  subsequently  to  the  passage  of  their  laws. 
This  fact  is  sufficient  to  show  that  the  ignorance  of  the  Supreme 
Court  of  the  United  States,  as  to  the  obligation  of  contracts,  is 
abundantly  participated  in  by  the  legislatures  and  couids  of  the 
States. 

The  writer  of  this  will  not  attempt,  at  this  time  — although  he 
may,  perhaps,  at  some  future  time  — to  define  this  constitutional 
“obligation  of  contracts,”  any  further  than  to  say  that  it  must 
necessarily  be  the  natural  obligation.  That  is,  it  must  be  the 
obligation,  which  contracts  have,  on  principles  of  natural  law, 
and  natural  right,  as  distinguished  from  any  arbitrary,  partial,  or 
conditional  obligation,  which  legislatures  may  assume  to  create, 
and  attach  to  contracts. 

This  constitutional  prohibition  upon  any  law  hnpairing  the 
obligation  of  contracts,  is  analogous  to  those  provisions,  in  both 
the  State  and  National  constitutions,  which  forbid  any  laws 
infringing  “the  freedom  of  speech  or  the  press,”  “the  free 
exercise  of  religion,”  and  “the  right  to  keep  and  bear  arms.” 

“The  freedom  of  speech  and  the  press,”  which  is  here  forbid- 
den to  be  infringed,  is  not  any  merely  arbitrary  freedom,  which 
legislatures  may  assume  to  create  and  define  by  statute.  But  it 
is  the  natural  freedom  ; or  that  freedom,  to  which  all  mankind 
are  entitled  of  natural  right.  In  other  words,  it  is  such  as  each 
and  every  man  can  exercise,  without  invading  the  rights  of 
others,  and  consistently  with  an  equal  freedom  on  the  part  of 
others. 

If  “ the  freedom,”  here  forbidden  to  be  infringed,  were  only 
such  freedom  as  legislatures  might,  in  their  pleasure  or  discretion. 


LEGALITY  OF  THE  SYSTEM. 


55 


see  fit  to  institute,  the  prohibition,  instead  of  protecting  any 
“freedom  of  speech  or  the  press,”  would  of  itself  imply  an 
authority  for  the  entire  destruction  of  all  such  “freedom.” 

The  same  is  true  of  “ the  free  exercise  of  religion,”  and  “the 
right  to  keep  and  hear  arms.”  If  the  rights,  which,  under  these 
names,  are  constitutionally  protected,  instead  of  being  the  natural 
rights,  which  belong  to  all  mankind,  were  only  such  rights  as 
legislatures,  in  their  pleasure  or  discretion,  might  assume  to 
create,  and  grant  to  the  people,  the  prohibitions  themselves  would 
impliedly  authorize  legislatures  to  destroy  those  very  rights, 
which  they  now  are  commanded  to  hold  sacred. 

So,  too,  “the  obligation  of  contracts,”  which  the  States  are 
forbidden  to  impair,  is  the  natural  obligation ; that  obligation, 
which  contracts  have  of  natural  right,  and  in  conformity  with 
natural  justice  ; and  not  any  merely  arbitrary,  fantastic,  absurd, 
or  unjust  obligation,  which  ignorant,  corrupt,  or  tyrannical  legis- 
latures may  assume  to  create,  and  attach  to  contracts.  Otherwise 
this  very  prohibition  against  “any  law  impairing  the  obligation 
of  contracts,”  would  allow  legislatures,  in  their  pleasure  or  dis- 
cretion, to  destroy  the  obligation  of  all  contracts  whatsoever. 

That  this  constitutional  “obligation  of  contracts”  is  the 
natw'al  obligation,  is  proved  by  the  language  of  the  provision 
itself,  which,  as  has  already  been  said,  implies  that  “the  obliga- 
tion [singular]  of  contracts  ” [plural]  is  one  and  the  same 
obligation  for  all  contracts  ^chatsoever,  that  have  any  legal 
obligation  at  all.  This  obligation,  which  is  the  same  in  all 
obligatory  contracts,  must  necessarily  be  the  natural  obligation, 
and  not  any  artificial  one  prescribed  by  legislatures ; because  it 
would  obviously  be  impossible  for  legislatures  to  create  any  one 
obligation,  different  from  the  natural  one,  and  prescribe  it  for,  or 
attach  it  to,  all  contracts  whatsoever.  Certainly  no  such  thing 
was  ever  attempted,  or  thought  of 

This  obligation,  which  the  States  are  forbidden  to  impair,  is 
proved  to  be  the  natural  one,  by  still  another  fact,  viz. : that  it 
is,  and  necessarily  must  be,  the  same  in  every  State  in  the 


56 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


Union ; forasmuch  as  the  prohibition  mentions  but  one  obliga- 
tion, which  the  States  are  forbidden  to  impair;  and  the  prohibi- 
tion to  impair  that  one  obligation  is  imposed  alike  upon  all  the 
States.  If  this  “obligation”  were  an  artificial  one,  to  be  created 
bj  State  legislatures,  it  would  be  liable  to  be  different  in  every 
State,  since  the  constitution  does  not  authorize  any  one  State, 
nor  even  Congress,  to  create  any  one  artificial  obligation,  and 
prescribe  it  as  a rule  for  all  the  States. 

This  obligation,  which  the  States  are  forbidden  to  impair,  must 
be  the  natural  one,  for  the  still  further  reason,  that  otherwise  that 
large  class  of  contracts  — by  far  the  largest  part  of  all  the  con- 
tracts, which  men  enter  into,  and  which  courts  recognize  as  valid, 
but  in  regard  to  which  no  special  “obligation”  has  ever  been 
prescribed  by  legislation  — would,  in  the  view  of  the  constitution, 
have  no  validity  or  obligation  at  all. 

Still  further.  Inasmuch  as  the  natural  obligation  is  necessarily 
the  only  real  obligation,  ■which,  in  the  nature  of  things,  contracts 
can  possibly  have ; and  inasmuch  as  all  artificial  or  unnatural 
obligations  are  inevitably  spurious,  false,  and  unjust,  that  para- 
mount rule  of  legal  interpretation,  which  requires  that  a meaning 
favorable  to  justice,  rather  than  injustice,  shall  be  given  to  the 
words  of  all  instruments,  that  will  bear  such  a meaning,  requires 
that  “ the  obligation,”  which  the  constitution  forbids  to  be  im- 
paired, should  be  held  to  be  the  natural  and  true  obligation, 
rather  than  any  one  of  those  innumerable  false  obligations,  which 
legislatures  are  in  the  habit  of  prescribing  in  its  stead. 

Finally.  Inasmuch  as  the  artificial  obligations  of  contracts 
are  innumerable ; and  inasmuch  as  this  constitutional  provision 
does  not  particularly  describe  the  obligation  it  designs  to  protect, 
that  obligation  must  be  presumed  to  be  the  natural  one,  or  else 
the  provision  itself,  on  account  of  its  indefiniteness,  must  utterly 
fail  of  protecting  any  obligation  at  all. 

The  natural  obligation  of  a contract,  then,  being  the  only  one, 
which  courts  are  at  liberty  to  regard,  their  first  duty,  on  this 
subject,  obviously  is  to  ascertain  what  the  natural  obligation  of 


LEGALITY  OE  THE  SYSTEM. 


57 


contracts  is.  When  they  shall  have  done  this,  they  Mill  have 
discovered  an  universal  law  for  all  contracts ; a laM,  that  must 
hullify  all  those  State  laws  — absurd,  vexatious,  tyrannical,  and 
unjust  — Mith  which  the  statute  books  of  the  States  are  filled, 
having  for  their  objects  to  destroy  or  impair  men’s  natural  right 
of  making  obligatory  contracts,  and  to  prescribe  what  obligations, 
different  from  the  natural  and  true  one,  men’s  contracts  shall 
have. 

Strictly  speaking,  courts  have  no  rightful  authority  either  to 
enforce  or  annul  a single  contract,  of  any  name  or  nature  what- 
ever, until  they  shall  have  ascertained  what  this  constitutional,  or 
natural^  obligation  of  contracts  is.  But,  if  they  will  continue 
to  do  so,  it  is  manifestly  sheer  mendacity,  or  sheer  stupidity,  for 
them  to  declare  that  the  contracts  of  private  bankers,  and  con- 
tracts now  termed  usurious  — contracts  naturally  obligatory 
as  any  that  men  ever  enter  into,  or  as  any  that  courts  ever 
enforce  — have  no  obligation ; or  that  anybody  can  be  lawfully 
punished  for  entering  into  such  contracts. 

Furthermore,  if  the  natural  obligation  of  contracts  is  the  only 
obligation,  which  courts  are  at  liberty  to  regard,  they  are  bound 
to  disregard  all  those  State  laws,  or  acts  of  incorporation,  of  any 
and  every  kind,  whether  for  banking  purposes  or  any  other, 
which  attempt  to  limit  the  liability  of  stockholders  to  any  thing 
less  than  the  natural  obligation  of  their  contracts. 

In  short,  the  only  constitutional  power,  now  existing  in  this 
country,  to  prohibit  any  contract  whatever,  that  is  naturally 
obligatory,  or  to  impair  the  natural  obligation  of  any  contract 
whatever,  is  the  single  power  given  to  Congress  “ to  establish 
uniform  laws  on  the  subject  of  bankruptcies,  throughout  the 
United  States.”  * 

* Independently  of  the  injustice  of  all  laws  impairing  the  natural  “obligation 
of  contracts,”  there  was  a very  weighty  reason  why  the  Slates  should  have  no 
power  to  enact  bankrupt  laws.  If  they  had  this  power,  each  State  might  have 
the  motive  to  pass  such  a law  for  the  purpose  of  liberating  her  own  citizens  fiom 
their  obligations  to  the  citizens  of  other  States ; when,  if  the  law  were  to  operate 
8 


58 


A NEW  SYSTEM  OF  PAPER  CURRENCY. 


There  is,  therefore,  no  legal  obstacle  in  the  way  of  the  imme- 
diate adoption  of  the  banking  system  now  proposed ; nor  any 
occasion  to  consult  the  State  legislatures,  or  ask  their  permission,' 
in  the  matter.  Nor,  in  loaning  the  currency,  will  there  be  any 
occasion  to  pay  any  regard  to  usury  laws. 


only  as  between  her  own  citizens,  she  might  not  choose  to  pass  the  law.  This 
power  of  passing  bankrupt  laws  was,  therefore,  confided  solely  to  the  general 
government ; and  its  laws  were  required  to  be  “ uniform  throughout  the  United 
States.” 

In  this  connection,  it  may  not  be  impertinent  for  the  writer  to  say,  that,  if  the 
natural  “ obligation  of  contracts  ” were  known,  he  apprehends  there  would  be  no 
occasion  for  any  bankrupt  or  insolvent  laws  at  all.  He  apprehends  there  is  a 
natural  limit  to  the  obligation  of  contracts  ; that,  in  the  case  of  ordinary  credit 
contracts,  time  is  an  essential  element  of  the  contracts  ; that,  if  there  be  no  other 
limit  to  the  natural  obligation  of  such  contracts,  the  principle,  that  the  law 
requires  impossibilities  of  no  one,  fixes  such  a limit;  and  that,  therefore,  the 
most  that  the  law  can  require,  in  the  way  of  the  fulfilment  of  a time  contract,  is 
that  the  debtor  shall  exercise  due  integrity  and  diligence  during  the  time  his 
contract  has  to  run  ; and  that,  if  he  do  this,  he  can  absolve  himself  from  the 
obligation  of  his  contract,  by  paying  to  the  extent  of  his  ability,  when  the  contract 
becomes  due. 

This  writer  apprehends,  however,  that  a more  precise  definition,  even  than 
this,  may  be  given  of  the  obligation  of  a contract.  But  this  is  not  the  place  to 
attempt  it. 


PART  SECOND. 


ARTICLES  OF  ASSOCIATION 


OP  A 

MORTGAGE  STOCK 

BANKING  COMPANY. 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsandee  Spoonbe, 
in  tlie  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 


ARTICLE  I. 

This  Association  shall  be  called  the  Boston  Banking 
Company. 


ARTICLE  II. 

The  Banking  House  of  said  Company  shall  always  be  in 
the  City  of  Boston,  in  the  County  of  Suppolk,  in  the  State 
of  Massachusetts. 


ARTICLE  III. 

The  Trustees  of  the  Capital  of  said  Association  shall  be 

A A , B B , and  C C , all  of  said 

Boston,  the  survivors  and  survivor  of  them,  and  their  successors 
appointed  as  hereinafter  prescribed. 


2 


ARTICLES  OP  ASSOCIATION  OF 


ARTICLE  IV. 

The  Capital  Stock  of  said  Company  shall  consist  of  four 
several  mortgages,  for  the  aggregate  amount  of  One  Hundred 
Thousand  Dollars,  and  interest,  made  to  said  Trustees,  as 

follows,  to  wit;  One  mortgage,  made  by  F F , for  the 

sum  of  Ten  Thousand  Dollars  and  interest ; one  mortgage, 

made  by  G G , for  Twenty  Thousand  Dollars  and 

interest ; one  mortgage,  made  by  H H , for  Thirty 

Thousand  Dollars  and  interest ; and  one  mortgage,  made  by 
I I , for  Forty  Thousand  Dollars  and  interest. 

Said  mortgages  were  all  entered  for  record,  in  the  Registry 
OF  Deeds  for  said  County  of  Suffolk,  in  the  State  of  Massa- 
chusetts, on  this  first  day  of  January,  in  the  year  eighteen 
hundred  and  sixty,  and  the  following  are  copies  thereof,  to  wit : 


STOCK  MORTGAGE. 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsander  Spooner, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 


Know  all  Men  by  these  Presents,  That  I,  F F , 

of  Boston,  in  the  County  of  Suffolk,  in  the  State  of  Massa- 
chusetts, in  consideration  of  one  dollar  paid  me  by  A 

A , B B , and  C C , all  of  said  Boston, 

Trustees  of  the  Boston  Banking  Company,  the  receipt  of 
which  is  acknowledged,  do  hereby  give,  grant,  sell,  and  convey 

unto  the  said  A A , B B , and  C C , 

in  their  capacities  as  Trustees  of  said  Boston  Banking  Company, 


A MORTGAGE  STOCK  BANKING  COMPANY. 


3 


and  to  the  survivors  and  survivor  of  them,  and  to  their  successors 
in  the  like  capacities,  and  to  their  assigns,  the  following  described 
premises,  to  wit. 

[Here  insert  a description  of  the  premises.] 

Said  premises  are  hereby  conveyed  to  said  Trustees,  in  trust, 
as  a part  of  the  Capital  Stock  of  said  Boston  Banking 
Company,  to  he  held,  used,  and  disposed  of  by  them,  and  their 
successors  in  the  office  of  Trustees,  in  accordance,  and  only  in 
accordance,  with  the  terms  of  this  mortgage,  and  the  Articles 
of  Association  of  said  Boston  Banking  Company  ; which 
Articles  have  been  this  day  agreed  upon,  by  and  between  the 
said  A A , B B , and  C C , Trus- 
tees, on  the  one  hand,  and  me,  the  said  F F , and 

G ^ G , and  H H- , and  I I , on  the 

other  hand. 

Said  Articles  of  Association  consist  of  printed  pages,  each 

one  of  which  is  signed,  at  the  bottom,  by  the  said  A A , 

B B , and  C C , Trustees,  and  also  by  me  the 

grantor,  and  the  said  G G , H H , and  I 

I . And  nine  copies  thereof  have  been  made  and  signed  as 

aforesaid,  and  one  copy  thereof  delivered  to  each  of  all  the  afore- 
named parties  ; and  one  copy  is  deposited  with  Lysander  Spooner, 
of  said  Boston.  Said  Trustees  are  also  to  cause  said  Articles  of 
Association,  signed  on  the  bottom  of  each  page  as  aforesaid,  to  be 
immediately  recorded  in  the  Registry  of  Deeds  for  said  County 
of  Suffolk  ; and  the  copy,  from  which  the  record  shall  be  made, 
shall  forever  remain  on  file  in  said  Registry. 

To  have  and  to  hold  the  aforegranted  premises  to  the  said 

A A , B B , and  C C , Trustees  as 

aforesaid,  and  to  the  survivors  and  survivor  of  them,  and  their 
successors  in  office,  in  trust  as  aforesaid,  and  to  their  assigns 
forever. 

And  I the  said  F F , for  myself,  my  heirs,  executors, 

and  administrators,  do  covenant  with  the  said  grantees  and  their 


4 


ARTICLES  OF  ASSOCIATION  OF 


successors  and  assigns,  that  I am  lawfully  seized  in  fee  simple  of 
the  aforegranted  premises ; that  they  are  free  of  all  encum- 
lirances ; that  I have  good  right  to  sell  and  convey  the  same  to 
the  said  grantees,  their  successors  and  assigns  as  aforesaid ; and 
that  I will,  and  my  heirs,  executors,  and  administrators  shall, 
warrant  and  defend  the  same  to  the  said  grantees,  their  successors 
and  assigns  forever,  against  the  lawful  claims  and  demands  of  all 
persons. 

Provided,  Nevertheless,  That  if  the  said  F F , 

his  heirs,  executors,  administrators,  or  assigns,  shall  pay  to  the 

said  A A , B— — B , and  C C , Trustees, 

the  survivors  or  survivor  of  them,  their  successors,  or  assigns, 
the  sum  of  Ten  Thousand  Dollars,  within  one  year  after 
demand  therefor,  in  writing,  on  or  after  the  fii'st  day  of  January, 
in  the  year  Eighteen  Hundred  and  Eighty  ; and  shall  also 
pay  interest  semi-annually  on  said  ten  thousand  dollars,  from  and 
after  this  first  day  of  January,  in  the  year  Eighteen  Hundred 
AND  Sixty,  at  the  rate  of  Seven  per  centum  per  annum  ; said 
interest  to  be  paid  on  the  first  days  of  July  and  January,  in  each 
and  every  year ; and  whenever  either  of  said  days  shall  fall  on 
Sunday,  the  interest  to  be  paid  on  the  Saturday  next  preceding  ; 
[and  if  it  shall  ever  be  fully,  finally,  and  judicially  determined 
that  interest  at  the  rate  of  seven  per  centum  per  annum  cannot 
be  lawfully  claimed  upon  this  contract,  then  this  contract  shall  he 
valid  for  interest  at  the  rate  of  only  six  per  centum  per  annum  :]* 

* The  provision  in  brackets  need  be  inserted  only  in  those  States  where  the 
laws  forbid  a higher  rate  of  interest  than  six  per  cent.  Although  such  laws  are 
unconstitutional  in  all  the  States,  yet  as  it  is  perhaps  uncertain  how  the  courts 
will  decide  the  question,  it  may  be  best  to  guard  against  any  possible  conse- 
quences of  an  usurious  contract,  by  making  the  rate  conditional  on  the  decision 
of  the  courts. 

The  object  of  fixing  the  rate  of  interest  at  seven  per  cent.,  instead  of  six,  is 
that  the  stock  may  be  certain  to  pay  a six  per  cent,  dividend,  after  deducting  all 
expenses  of  the  company,  even  though  no  profit  at  all  should  be  made  by  the 
banking. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


5 


and  if  interest  shall  ever  fail  to  be  paid  on  the  day  it  shall  become 
due,  then  interest  shall  he  paid  on  interest,  at  the  rate  of  six  per 
centum  per  annum ; and  shall  also  repay  to  said  Trustees,  the 
survivors  and  survivor  of  them,  their  successors  and  assigns,  all 
such  sums,  with  interest,  (at  the  rate  of  six  per  centum  per 
annum,)  as  they  may  laiyfully  expend,  in  pursuance  of  said 
Articles  of  Association,  for,  and  on  account  of,  taxes,  and 
insurance  upon,  and  sale  of,  the  mortgaged  premises,  or  any  part 
thereof ; then  this  deed  shall  be  void  to  all  intents  and  purposes. 

And  provided  also  that,  at  any  time  after  four  months’ 
continuance  of  any  breach  of  any  of  the  foregoing  conditions,  the 
grantees,  the  survivors  or  survivor  of  them,  their  successors  or 
assigns,  may  sell  and  dispose  of  the  granted  premises,  with  all 
improvements  that  may  be  thereon,  at  public  auction ; such  sale 
to  be  in  said  City  of  Boston,  without  further  notice  or  demand, 
except  giving  notice  of  the  time  and  place  of  sale,  by  properly 
advertising  the  same  in  each  of  the  six  weeks  next  preceding  the 
sale,  in  at  least  three  newspapers  printed  in  said  County  of 
SulFolk ; and  in  his  or  their  own  names  — that  is.  to  saj^,  the 
Trustees  as  Trustees,  and  their  assigns  as  assigns  — or  as  the 
attorney  or  attorneys  of  the  grantor  or  his  assigns,  for  that  pur- 
pose by  these  presents  duly  authorized,  convey  the  same,  abso- 
lutely and  in  fee  simple,  to  the  purchaser  or  purchasers  accord- 
ingly ; and  out  of  the  money  arising  from  such  sale,  to  retain  all 
sums,  principal  and  interest,  then  secured  by  this  deed,  (whether 
then  or  thereafter  payable,)  together  with  all  costs  and  expenses, 
including  all  sums  paid  by  said  grantees,  the  survivors  and  sur- 
vivor of  them,  their  successors  or  assigns,  for  or  on  account  of 
taxes  and  insurance  on  the  premises ; Paying  the  surplus,  if 
any,  to  the  said  grantor  or  his  assigns,  or  to  the  court  ordering 
or  confirming  such  sale ; And  such  sale  shall  forever  bar  the 
said  grantor,  and  all  persons  claiming  by  or  under  him,  from  all 
right  and  interest  in  the  premises,  either  at  law  or  in  equity.  It 
being  mutually  agreed  that  the  said  Trustees,  the  survivors  and 
survivor  of  them,  and  their  successors  (in  their  capacities  as 


6 


ARTICLES  OF  ASSOCIATION  OF 


Trustees,  and  not  otherwise)  and  their  assigns,  (in  their  indi- 
vidual capacity,)  may  purchase  at  said  sale,  and  that  no  other 
purchaser  shall  be  answerable  for  the  application  of  the  purchase 
money. 

And  provided  further.  That  until  default  of  the  payment 
of  the  said  Ten  Thousand  Dollars,  or  interest,  or  other  sum 
herein  secured  to  be  paid,  neither  the  grantees,  nor  either  of 
them,  nor  their  successors  nor  assigns  shall  have  any  right  to 
enter  and  take  possession  of  the  premises. 

In  Witness  Whereof,  I,  the  said  F F , and 

I,  C F , wife  of  said  grantor,  who,  for  the  consideration 

aforesaid,  and  of  one  dollar  to  me  paid  by  said  grantees,  the 
receipt  of  which  is  hereby  acknowledged,  do  hereby  release  to 
said  grantees,  the  survivors  and  survivor  of  them,  and  to  their 
successors  and  assigns  forever,  all  my  right  of  or  to  a homestead 
in  or  out  of  said  real  estate,  and  also  all  my  right  and  title  of  or 
to  dower  in  the  granted  premises,  have  hereunto  set  our  hands 
and  seals,  this  first  day  of  January,  in  the  year  Eighteen 
Hundred  and  Sixty. 

Signed,  sealed,  and  delivered,  ) 
in  presence  of  \ 

R R . \ 

S S . J 

[Here  insert  copies  of  the  other  Mortgages.] 


F F . [SEAL.] 

C F . [SEAL.] 


ARTICLE  V. 

Said  Capital  Stock  shall  be  divided  into  One  Thousand 
Shares,  of  One  Hundred  Dollars  each.  These  shares  shall 
be  numbered  consecutively,  from  one  to  one  thousand,  inclusive. 
They  are  hereby  declared  to  be  the  property  of  the  aforesaid 
mortgagors,  and  shall  be  apportioned  among  them,  according  to 


A MORTGAGE  STOCK  BANKING  COMPANY. 


7 


the  amounts  of  their  respective  mortgages  aforesaid,  as  follows, 
to  wit ; One  Hundred  Shares,  numbered  consecutively,  from 
one  to  one  hundred,  inclusive,  shall  be  the  property  of  the  said 
F F ; Two  Hundred  Shares,  numbered  consecu- 

tively, from  one  hundred  and  one  to  three  hundred,  inclusive, 
shall  be  the  property  of  the  said  G G ; Three  Hun- 

dred Shares,  numbered  consecutively  from  three  hundred  and 
one  to  six  hundred,  inclusive,  shall  be  the  property  of  the  said 

H H ; and  the  remaining  Four  Hundred  Shares, 

numbered  consecutively  from  six  hundred  and  one  to  one  thou- 
sand, inclusive,  shall  be  the  property  of  the  said  I I . 

And  the  aforesaid  stock  shall  be  entered  upon  the  books  of  the 

Trustees  as  the  property  of  the  said  F F , G 

G , H H , and  I I , according  to  the 

apportionment  aforesaid. 

AKTICLE  VI. 

The  aforesaid  one  thousand  shares  of  Stock  shall  be  called  the 
Productive  Stock,  and  shall  be  entitled  to  all  the  dividends. 


AKTICLE  VII. 

The  dividends  shall  consist  of  the  interest  on  said  mortgages, 
and  the  profits  of  the  banking,  and  of  any  other  business,  done 
by  said  Company. 

ARTICLE  VIII. 

In  addition  to  the  said  Productive  Stock,  the  said  Trustees 
shall  create  another  Stock,  to  the  amount  of  One  Hundred 
Thousand  Hollars,  to  be  called  Circulating  Stock ; which 
Circulating  Stock  shall  be  divided  into  shares  of  One  Hollar 
BACH.  Said  shares  shall  be  numbered  consecutively  from  one 


8 


ARTICLES  OF  ASSOCIATION  OP 


to  one  hundred  thousand,  inclusive ; and  certificates,  scrip,  or 
bills  thereof,  transferable  by  delivery,  and  making  and  declaring 
said  Circulating  Stock  to  be  the  property  of  the  bearers  or 
holders  of  said  certificates,  scrip,  or  bills,  shall  be  made  and 
signed  by  the  Trustees,  and  countersigned  by  the  President  of 
the  Council,  and  by  the  Cashier. 


ARTICLE  IX. 

Said  Circulating  Stock  shall  be  entitled  to  no  dividends  ; and 
its  value  will  consist  wholly  in  its  title  to  be  received  in  payment 
of  any  debts  due  to  said  Boston  Banking  Company,  and  in  its 
title  to  be  otherwise  redeemed,  as  is  hereinafter  provided  for.  In 
law,  it  shall  be  in  the  nature  of  a lien  upon  the  Productive 
Stock. 


ARTICLE  X. 

The  said  certificates,  scrip,  or  bills  of  said  Circulating  Stock 
may  be  of  various  denominations ; that  is  to  say,  for  any  number 
of  shares,  from  one  to  one  hundred ; and  each  certificate,  scrip, 
or  bill  shall  not  only  express  the  aggregate  number  of  shares 
it  represents,  but  also  the  particular  number  borne  by  each  shai’e 
represented.* 

All  certificates,  scrip,  or  bills  of  said  Circulating  Stock  shall 
be  in  the  following  form,  (names  and  dates  being  changed  when 
necessary,  and  the  numbers  also  being  made  to  correspond  with 
the  aggregate  number  of  shares,  and  the  particular  number  of 
each  share,  represented  in  each  certificate,)  to  wit. 


* As  a means  of  detecting  counterfeits,  over-issues,  &c.,  it  will  be  useful  to 
have  each  certificate  of  Circulating  Stock  express  the  particular  numbers  borne 
by  the  shares  it  represents. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


9 


• Where  a Certificate  represents  but  a single  Share,  the  words  In  brackets  may  be  left  out. 


10 


ARTICLES  OF  ASSOCIATION  OF 


ARTICLE  XI. 

No  certificates,  scrip,  or  bills  of  said  Circulating  Stocky  for  a 
greater  amount,  in  the  aggregate,  than  One  Hundred  Thousand 
Shares,  shall  ever  be  made  and  signed  by  the  Trustees,  Presi- 
dent, or  Cashier,  so  as  to  be  in  existence  at  any  one  time ; but  if 
any  of  said  certificates,  scrip,  or  bills  shall,  at  any  time,  be  can- 
celled or  destroyed,  either  by  the  Trustees,  or  any  other  persons, 
new  certificates,  scrip,  or  bills  may  be  substituted  therefor,  except 
when  a corresponding  amount  of  Productive  Stock  shall  also 
have  been  cancelled,  as  hereinafter  authorized. 


CHAPTER  XII. 

The  Trustees  (subject  to  the  conditions  hereinafter  prescribed) 
may  issue  said  certificates,  scrip,  or  bills  of  the  Circulating 
Stock,  for  circulation  as  a Currency,  by  discounting  therewith,  or 
exchanging  them  for,  such  promissory  notes,  checks,  di’afts, 
orders,  bills  of  exchange,  or  other  securities,  as  the  Trustees  and 
Council  may  see  fit  to  accept : also  by  jmrchasing  therewith  such 
furniture,  books,  and  other  personal  property  as  said  Company 
may  need  to  purchase,  for  the  purposes  of  its  business  as  a 
banking  company ; also  by  paying  any  debts  that  may  at  any 
time  be  due  by  said  Company,  and  any  expenses  that  said  Com- 
pany may  lawfully  incur,  in  the  course  and  prosecution  of  its 
said  business. 


ARTICLE  XIII. 

The  said  certificates,  scrip,  or  bills  of  said  Circulating  Stock, 
shall,  at  all  times,  be  a lawful  tender,  at  its  nominal  value  of  One 
Hollar  per  share,  in  payment  of  any  debts  due  to  said  Boston 
Banking  Company.  They  shall  also,  at  all  times,  (except  as 


A MOETGAGE  STOCK  BANKING  COMPANY. 


11 


hereinafter  provided  for,  in  Article  XXIY,)  when  presented 
IN  EVEN  AMOUNTS  OF  OnE  OR  MORE  HUNDRED  SHARES,  be 
entitled  to  be  redeemed,  on  demand,  by  the  transfer  of  an  equiv- 
alent nominal  amount  of  Productive  Stock,  unless  redeemed 
by  the  payment  of  gold  or  silver  coin  of  equivalent  nominal 
value. 

ARTICLE  XIV. 

The  original  holders  of  the  Productive  Stock,  to  wit : the 

aforesaid  F F , G G , H H , and 

I I , shall  he  termed  Primary  Stockholders. 

ARTICLE  XV. 

All  persons,  who  shall  hold  Productive  Stock  by  transfer, 
in  redemption  of  Circulating  Stock,  shall  be  called  Secondary 
Stockholders  ; that  is  to  say,  unless  and  until  they  shall  become 
Primary  Stockholders,  in  the  manner  hereinafter  provided  for 
in  Article  XXI. 


ARTICLE  XVI. 

The  Secondary  Stockholders  shall  be  entitled  to  receive  Divi- 
dends on  their  stock,  at  the  rate  of  six  per  centum  per 
ANNUM  — NO  MORE,  NO  LESS  — payable  semi-annually,  on  the 
regular  dividend  days,  at  the  Banking  House  of  said  Company. 

ARTICLE  XVII. 

The  Primary  Stockholders  shall  be  entitled  to  receive 
whatever  dividends  may  remain  to  be  distributed,  after  the  divi- 
dends to  the  Secondary  Stockholders  shall  have  been  paid,  and 
all  other  liahilities  and  obligations  of  the  Company  shall  have 
been  cancelled — whether  such  dividends  (to  the  Primary  Stock- 
holders) shall  amount  to  more  or  less  than  six  per  centum  per 


annum. 


12 


ARTICLES  OF  ASSOCIATION  OF 


ARTICLE  XVIII. 

Whenever  it  shall  he  necessary  to  transfer  a share  of  Pro- 
ductive Stock,  in  redemption  of  Circulating  Stock,  the  share 
to  be  transferred  shall  be  selected,  by  the  Trustees,  from  such 
shares  (if  any  there  shall  be)  as  shall  have  been  taken,  by  said 
Company,  in  payment  of  debts  of  delinquent  stockholders,  or  be 
otherwise  owned  by  said  Company,  in  its  cox'porate  capacity. 

But  if,  at  any  time,  when  it  shall  be  necessary  to  transfer 
Productive  Stock,  in  redemption  of  Circulating  Stock,  there 
shall  be  no  Productive  Stock  owned  by  the  Company,  in  its 
corporate  capacity,  a selection  of  the  stock  to  be  transferred,  shall 
be  made,  by  the  Trustees,  from  among  the  stock  of  the  several 
Primary  holders,  in  the  most  impartial  and  equitable  manner 
practicable,  taking  stock,  in  the  first  instance,  from  the  largest 
Primary  holders,  rather  than  from  the  smallest,  and  afterwards 
apportioning  the  stock,  taken  for  such  purposes,  equitably  as  may 
be,  among  the  several  Primary  holders,  according  to  the 
amounts  of  their  stock  respectively.*  And  no  Productive 
Stock,  holden  by  a Secondary  holder,  shall  ever  be  transferred 
in  redemption  of  Circulating  Stock. 


ARTICLE  XIX. 

Whenever  any  Productive  Stock,  less  than  the  entire  Pro- 
ductive Stock  of  the  Company,  shall  have  been  transferred, 
in  redemption  of  Circulating  Stock- — that  is  to  say,  so  long 
as  any  portion  of  the  Productive  Stock  shall  remain  in 

* A Primary  Stockholder  can  have  no  serious  objection  to  the  transfer 
of  his  Productive  Stock,  in  redemption  of  the  Circulation ; because  no  divi- 
dends can  be  paid  to  any  of  the  then  existing  body  of  Primary  holders,  until 
his  transferred  stock  shall  have  been  repurchased  by  the  Company,  and  restored 
to  him,  when  it  will  stand  on  the  same  footing,  in  regard  to  dividends,  as  if  it 
had  never  been  transferred.  See  Article  XX. 


A MORT&AGB  STOCK  BANKING  COMPANY. 


13 


the  hands  either  of  Primary  holders,  or  of  the  Company  in  its 
corpoi’ate  capacity  — said  Company  shall  have  the  right  to  buy 
back,  from  the  Secondary  holder  or  holders,  any  and  all  such 
transferred  stock,  by  paying  therefor,  at  the  banking  house  of 
the  Company,  gold  or  silver  coin  of  equivalent  nominal  value, 
and  interest  or  dividends  thereon,  at  the  rate  of  six  per  centum 
per  annum,  from  the  time  said  stock  was  thus  transferred.  And, 
for  this  purpose,  any  dividend,  that  may  have  been  paid  to  the 
Secondary  holder,  since  the  transfer  of  the  stock  to  him,  and 
previous  to  the  re-purchase  of  it  from  him,  shall  be  accounted 
the  same  as  if  paid  at  the  time  of  such  re-purchase. 

ARTICLE  XX. 

Whenever  any  Productive  Stock,  belonging  to  a Primary 
HOLDER,  shall  have  been  transferred  by  the  Company,  in  redemp- 
tion of  Circulating  Stock,  no  dividends  shall  be  paid  to  any  of 
the  then  existing  body  of  Primary  holders,  until  such  trans- 
ferred stock  shall  have  been  bought  back  by  the  Company,  and 
restored  to  the  Primary  holder,  from  whom  it  shall  have  been 
taken,  or  to  his  representatives,  and  placed  on  the  same  footing, 
in  regard  to  dividends,  with  all  the  other  Productive  Stock  of 
the  Primary  holders. 

ARTICLE  XXI. 

Whenever,  if  ever,  it  shall  happen  that  the  entire  Productive 
Stock  of  said  Company  shall  have  been  transferred,  from  the 
first  body  of  Primary  holders,  (including,  as  such,  the  Com- 
pany in  its  corporate  capacity,)  in  redemption  of  Circulating 
Stock,  all  the  rights  of  the  then  existing  body  of  Primary 
HOLDERS,  and  especially  their  right  to  buy  back  such  transferred 
stock,  from  the  Secondary  holders,  shall  at  once  cease  and  become 
extinct ; and  the  then  existing  body  of  Secondary  holders  shall, 


14 


ARTICLES  OE  ASSOCIATION  OF 


each  and  all,  by  reason,  and  in  virtue,  of  that  event,  succeed  at 
once  to  all  the  rights,  and  come  at  once  under  all  the  responsi- 
bilities, of  Primary  Stockholders  ; and  shall  be  deemed  to  be 
Primary  Stockholders,  both  in  law,  and  in  fact.  And  the 
business  of  the  Company  shall  then  proceed  as  at  first.  And  if 
it  shall  ever  happen  that  the  entire  Productive  Stock  of  said 
Company  shall  be  transferred  from  this  second  body  of  Primary 
Stockholders,  in  redemption  of  Circulating  Stock,  all  the  rights 
of  said  second  body  of  Primary  Stockholders  shall  at  once 
cease  and  become  extinct ; and  the  then  existing  (second)  body 
of  Secondarg  Stockholders  shall,  each  and  all,  by  reason,  and  in 
virtue,  of  that  event,  succeed  at  once  to  all  the  rights,  and  come 
at  once  under  all  the  liabilities,  of  Primary  Stockholders  ; 
and  shall  he  deemed  to  be  Primary  Stockholders,  both  in  law, 
and  in  fact.  And  the  same  transfer  of  rights  and  liabilities,  from 
one  body  of  Primary  Stockholders,  to  the  then  existing  body 
of  Secondary  Stockholders,  shall  take  place  so  often  as,  and 
whenever,  the  entire  Productive  Stock  of  said  Company  shall 
have  been  transferred  in  redemption  of  the  Circulating  Stock.* 


ARTICLE  XXII. 

Whenever  a body  of  Secondary  Stockholders  shall  have  become 
Primary  holders,  in  the  manner  provided  for  in  Article  XXI, 
no  dividend  shall  be  paid  to  any  one  of  them,  until  he  shall  have 
surrendered  his  certificate  or  certificates  of  stock  as  a Secondary 

* Of  course  no  body  of  Primary  Stockholders  will  ever  suffer  the  entire 
Productive  Stock  of  the  Company  to  be  transferred,  in  redemption  of  Circu- 
lation, in  the  manner  provided  for  in  this  Article,  until  they  shall  become  utterly 
bankrupt ; that  is,  until  all  the  resources  of  the  bank,  that  belong  to  the  Primary 
Stockholders  — such,  for  example,  as  debts  due  the  bank  — shall  be  utterly 
exhausted  ; because,  by  doing  so,  they  would  forfeit  those  resources.  They  will 
therefore  hold  on  to  some  of  the  Productive  Stock,  (though  it  be  but  a single 
share,)  as  long  as  they  hold  on  to  any  of  the  property  of  the  Company. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


15 


holder,  and  accepted  a new  certificate,  or  new  certificates,  of 
stock,  as  a Primary  holder.  And  such  new  certificate  or 
certificates  shall  be  granted  to  him  on  demand,  and  on  the  sur- 
render of  his  certificate  or  certificates  as  a Secondary  holder. 


ARTICLE  XXIII. 

The  Trustees  may  accept  loans  from  the  Primary  Stock- 
holders, whenever  it  may  be  necessary  or  convenient,  in  order 
to  save  the  Productive  Stock  from  being  transferred  in  redemp- 
tion of  the  Circulating  Stock  ; such  loans  to  be  repaid  only  in 
the  manner,  and  in  the  order  relatively  to  other  claims,  herein- 
after provided  for  in  Article  XXIX. 

And  if  any  Primary  holder  or  holders  of  Productive 
Stock  shall  loan,  to  the  Company,  his  or  their  just  proportion  of 
the  amount  necessary  to  save  all  the  Productive  Stock  from 
being  transferred  in  redemption  of  the  Circulating  Stock,  his  or 
their  own  Productive  Stock  shall  be  exempted  from  such 
transfer,  so  long  as  it  can  be,  consistently  with  the  rights  of  the 
holders  of  Circulating  Stock. 

But  if  a loan  shall  ever  be  made  to  the  Company,  by  a Pri- 
mary Stockholder,  and,  before  such  loan  shall  be  repaid,  the 
entire  Productive  Stock  of  the  Company  shall  have  been 
transferred  to  Secondary  holders,  in  redemption  of  Circulating 
Stock,  as  mentioned  in  Article  XXI,  such  Primary  Stock- 
holder’s claim  to  have  his  loan  repaid  to  him,  shall  be  forfeited.* 

ARTICLE  XXIV. 

The  requirement,  in  Article  XIII,  that  certificates,  scrip,  or 
bills  of  Circulating  Stock,  in  even  amounts  of  one  or  more  hun- 
dred shares,  shall  be  redeemed  by  coin  or  Productive  Stock, 

* This  provision  is  necessary,  for  otherwise  the  Productive  Stock  would 
pass  into  the  hands  of  the  new  holders,  subject  to  an  encumbrance,  and  therefore 
not  at  its  par  value. 


16 


AKTICLES  OF  ASSOCIATION  OF 


on  demand,  shall  be  understood  subject  to  this  proviso,  viz. : that 
wheuever  any  certificates,  scrip,  or  bills  of  Circulating  Stock,  in 
even  amounts  of  one  or  more  hundred  shares,  shall  be  presented 
by  the  holder  thereof,  to  the  Company,  for  redemption,  and  the 
Company  shall  elect  to  pay  interest  on  them  semi-annually,  at 
the  banking  house  of  the  Company,  on  the  regular  dividend  days, 
at  the  rate  of  six  per  centum  per  annum,  rather  than  redeem 
them  by  coin  or  Productive  Stock,  they  shall  be  at  liberty  to 
do  so.  But  if  said  Company  shall  at  any  time  fail  to  pay  said 
semi-annual  interest,  on  the  day  it  shall  become  due,  the  holder 
of  said  certificates,  scrip,  or  bills  may  at  once  demand  their 
redemption,  either  in  gold  or  silver  coin,  or  in  Productive 
Stock,  at  the  option  of  the  Company;  and  the  interest,  that 
shall  have  accrued,  shall  be  due  and  payable  at  once,  in  gold  and 
silver  coin. 

Provided,  however,  that  unless  the  presentation  of  said  certifi- 
cates, scrip,  or  bills  for  redemption,  shall  have  been  made  at  least 
four  months  prior  to  the  next  succeeding  dividend  day,  the  interest, 
which  shall  have  accrued  on  such  certificates,  scrip,  or  bills,  on 
the  first  dividend  day  next  after  their  presentation,  shall  not  be 
payable,  except  at  the  option  of  the  Company,  until  the  second 
dividend  day  next  after  their  presentation. 

ARTICLE  XXV. 

Whenever  certificates,  scrip,  or  bills  of  Circulating  Stock,  in 
even  amounts  of  one  or  more  hundred  dollars,  shall  have  been 
presented  for  redemption,  and  the  Company  shall  have  elected  to 
pay  interest  on  them,  as  provided  for  in  Article  XXIV,  rather 
than  redeem  them  by  coin  or  Productive  Stock,  the  holder 
thereof  shall  have  the  right  to  deposit  his  said  certificates,  scrip, 
or  bills  with  said  Company,  and  to  demand  a proper  voucher 
therefor,  specifying  the  amount  and  date  of  the  deposit,  and 
acknowledging  that  said  certificates,  scrip,  or  bills  were  presented 


A MORTGAGE  STOCK  BANKING  COMPANY. 


17 


for  redemption.  And  the  certificates,  scrip,  or  bills,  thus  depos- 
ited, shall  be  immediately  sealed  up  in  a secure  envelope,  upon 
■which  the  name  of  the  depositor,  and  the  amount,  date,  and 
purpose  of  the  deposit  (that  is,  for  redemption)  shall  be  endorsed 
by  said  Company.  And  the  seal  of  said  envelope  shall  not  be 
broken  by  said  Company,  nor  any  of  its  oflBcers,  without  the 
consent  of  said  depositor,  or  his  representatives,  given  in  writing, 
until  said  Company  shall  have  made  a tender  of  redemption  and 
interest,  as  provided  for  in  Articles  XIII  and  XXIV.  And  the 
Company  shall  be  responsible  to  said  depositor,  and  his  represen- 
tatives, for  the  safe  keeping  of  said  deposit  against  all  accidents, 
trespasses,  and  contingencies,  of  every  name  and  nature  what- 
soever, until  they  shall  have  made  the  tender  aforesaid.* 

Provided,  however,  that  if  any  depositor,  or  his  representa- 
tives, shall  withdraw  his  or  their  deposit  at  any  time  prior  to  the 
day  on  which  interest  thereon  would  become  payable,  neither  he 
nor  they  shall  have  any  claim  for  interest  during  the  time  of 
the  deposit. 


ARTICLE  XXVI. 

If,  when  the  holder  of  certificates,  scrip,  or  bills  of  Circidating 
Stock,  in  even  amounts  of  one  or  more  hxmdred  shares,  shall 
have  presented  them  for  redemption,  and  the  Company  shall  have 
elected  to  pay  interest  on  them,  as  mentioned  in  Article  XXIV, 
he  shall  prefer  to  retain  them  in  his  own  custody,  rather  than 
deposit  them  with  said  Company,  he  shall  be  at  liberty  to  do  so, 
without  affecting  his  rights,  as  provided  for  in  said  Article, 
except  that  the  Company  shall  not  be  responsible  for  the  safe 
keeping  of  said  certificates,  scrip,  or  bills.  And  he  shall  have  a 
right  to  demand  of  said  Company  that  they  seal  up  said  certifi- 

* It  is  necessary  that  bills  deposited  for  redemption,  should  be  sealed  up,  for 
otherwise  it  would  be  in  the  power  of  the  Company  to  re-issue  them.  If  re- 
issued, before  they  had  been  redeemed,  they  would  require  a double  redemption  ; 
and  there  would  not  be  enough  Pkoductive  Stock  to  redeem  them. 

3 


18 


ARTICLES  OF  ASSOCIATION  OF 


cates,  scrip,  or  bills,  in  a secure  envelope,  and  endorse  thereon 
the  amount  of  said  certificates,  scrip,  or  bills,  and  the  date  and 
purpose  of  their  presentation,  (that  is,  for  redemption,)  and  the 
name  of  the  owner  thereof,  and  then  return  to  himself  the  parcel 
so  sealed  up  and  endorsed.  And  he  shall  also  have  the  right  to 
demand  of  said  Company  a separate  and  proper  voucher  of  the 
amount  of  said  certificates,  scrip,  or  bills,  and  the  date  and 
purpose  of  their  presentation. 

Provided^  however^  that  if,  when  a sealed  parcel  of  certificates, 
scrip,  or  bills  shall  have  been  presented  for  redemption,  and  then 
sealed  up,  and  returned  to  the  owner,  he  or  his  representatives 
shall  break  the  seal  of  said  parcel,  so  as  to  admit  of  his  or  their 
having  taken  out  or  used  any  of  the  certificates,  scrip,  or  bills, 
he  and  they  shall  thereby  forfeit  all  claim  to  interest  on  the 
whole  parcel.* 


* Articles  XXIV,  XXV,  and  XXVI,  may  be  left  out,  if  it  should  be  thought 
best;  but  it  will  probably  he  expedient  to  retain  them,  to  prevent  the  too  frequent 
transfer  and  re-purchase  of  Peoductive  Stock. 

A holder  of  certificates,  scrip,  or  bills  of  Circvlating  Stock,  who  shall  have 
presented  them  for  redemption,  can  have  no  reasonable  objection  to  the  non- 
redemption of  them,  by  the  transfer  of  Peoddctive  Stock,  so  long  as  interest 
upon  them  is  paid  semi-annually;  because  theykeing  in  the  meantime  Sealed 
up,  cannot  be  put  in  circulation  by  the  bank,  so  as  to  increase  the  liabilities  of 
the  bank,  or  endanger  their  own  final  redemption.  All  he  loses  by  the  non- 
immediate  redemption  of  them,  by  the  transfer  of  Peoductive  Stock,  is,  that 
he  cannot  have  the  rights  of  a holder  of  Peoductive  Stock,  to  vote  for  Coun- 
cillors, and  to  be  himself  a Councillor.  But  he  is  amply  compensated  for  this 
deprivation,  by  the  fact  that  the  Company  are  bound  (Article  XXIX)  to  pay 
him  interest,  in.  full,  on  his  bills,  (presented  for  redemption,)  before  any  dividend 
at  all  can  be  paid  on  the  very  Peoductive  Stock  itself,  which  would  be  trans- 
ferred to  him,  in  redemption  of  his  bills,  if  he  were  to  insist  on  their  immediate 
redemption. 

He  also  has  the  assurance  that  the  Company  will  redeem  his  bills  soon  as 
reasonably  may  be,  either  by  coin  or  Peoductive  Stock  ; because,  until  they 
do  so,  the  bank  must  pay  interest  on  them,  and  the  bills  remain  sealed  up,  and 
the  bank  lose  the  benefit  of  putting  them  in  circulation.. 

The  reason,  why  the  Company  may  not  wish,  at  all  times,  to  transfer  Peo- 
ductive Stock,  in  redemption  of  bills,  immediately  on  their  being  presented 
for  redemption,  is,  that  it  might  be  very  troublesome  to  be  continually  changing 


A MORTGAGE  STOCK  BANKING  COMPANY. 


19 


ARTICLE  XXVII. 

Certificates,  scrip,  or  bills  of  Circulating  Stock,  in  less 
amounts  than  one  hundred  dollars,  besides  being  receivable  in 
payment  of  debts  due  to  the  Company,  may  be  redeemed  by  gold 
and  silver  coin,  on  demand,  if  the  Trustees  shall  deem  it  expe- 
dient, and  if  there  shall  be  no  other  claims  having  a preference, 
by  virtue  of  Article  XXIX.  But  if  there  shall  be  any  delay  in 
the  redemption,  whether  it  shall  be  caused  by  the  Trustees 
deeming  it  inexpedient  to  redeem  in  gold  or  silver  on  demand,  or 
by  there  being  other  claims  having  a preference,  by  virtue  of 
Article  XXIX,  then  interest,  at  the  rate  of  six  per  centum  per 
annum,  shall  be  paid,  at  the  banking  house  of  the  Company,  on 
all  amounts  of  fifty  shares  and  upwards,  from  and  after  one  month 
after  the  day  of  presentation ; said  interest  to  be  payable  only  at 
the  time  of  redemption  of  the  principal,  unless  by  consent  of  the 
Company.  But  amounts  of  less  than  fifty  shares,  shall  be  entitled 
to  no  interest. 


the  ownership  of  the  Productiv.e  Stock,  by  transferring  it  in  redemption  of 
bills,  and  then  re-purchasing  it  in  a short  time  afterwards.  The  Company  would, 
therefore,  wish  to  transfer  Productive  Stock,  in  redemption  of  bills,  only 
when  it  was  likely  to  be  a considerable  time  before  they  could  re-purchase  it. 

The  ordinary,  if  not  the  only,  motive,  the  Company  would  have  for  not 
redeeming  bills  immediately  on  presentation,  by  the  transfer  of  Productive 
Stock,  would  be,  that  they  would  prefer,  and  would  expect  soon  to  be  able,  to 
redeem  them  with  coin.  And  as  the  bills,  sealed  up,  and  drawing  interest,  would 
be  just  as  valuable  and  productive  to  the  holder,  as  the  same  amount  of  Pro- 
ductive Stock  (held  by  a Secondary  holder)  would  be,  there  is  no  good  reason 
for  compelling  the  Company  to  transfer  Productive  Stock,  when  they  would 
have  a right,  and  would  most  likely  very  soon  wish,  and  be  able,  to  re-purchase  it. 

Unless  the  banking  business  were  badly  conducted, — that  is,  unless  the  bank 
should  discount  long  paper,  or  bad  paper, — there  would  probably  never  be  a 
necessity  for  the  transfer  of  any  Productive  Stock  at  all,  in  redemption  of  the 
Circulation.  But  the  redemption  (when  not  made  by  receiving  the  bills  in  pay- 
ment of  debts  due  the  bank)  would  take  place  in  coin,  either  immediately  on  the 
presentation  of  the  bills,  or  very  soon  after,  with  interest  for  the  delay. 


20 


ARTICLES  OF  ASSOCIATION  OF 


The  amounts  thus  presented  for  redemption,  in  order  to  be 
entitled  either  to  interest,  or  to  redemption  in  gold  or  silver,  shall 
be  deposited  with  the  Company,  and  a proper  voucher  therefor 
given  by  the- Company.  And  if  the  deposit  shall  be  withdrawn 
before  redemption,  all  interest  thereon  shall  be  forfeited. 

The  Circulating  Stock,  thus  deposited  for  redemption,  shall 
neither  be  loaned,  nor  re-issued,  by  the  Company,  until  it  shall 
have  been  redeemed.  But  it  shall  be  sealed  up  in  a secure 
envelope,  and  the  amount,  date,  and  purpose  of  the  deposit,  (that 
is,  for  redemption,)  with  the  name  of  the  depositor,  endorsed 
thereon.  And  the  seal  of  the  envelope  shall  not  be  broken  by 
the  Company,  until  they  shall  have  tendered  redemption  in  gold 
or  silver  coin,  of  equivalent  nominal  value,  with  interest  where 
interest  shall  be  due.  And  the  Company  shall  be  responsible  to 
said  depositor,  and  his  representatives,  for  the  safe  keeping  of 
said  deposit,  against  all  accidents,  trespasses,  and  contingencies, 
of  every  name  and  nature  whatsoever,  until  they  shall  have  made 
the  tender  aforesaid.  And  said  deposit  shall  be  redeemed,  in  the 
order  in  which  it  stands,  relatively  to  other  claims,  in  Article 
XXIX.* 


* This  Article  is,  perhaps,  not  very  important.  Its  object  is  to  make  it  for 
the  interest  of  the  holders  of  Circulating  Stock,  in  less  amounts  than  one  hundred 
shares  (dollars),  to  dispose  of  it  in  the  course  of  business,  and  let  it  come  back  to 
the  bank,  either  in  payment  of  debts  due  to  the  bank,  or  in  even  amounts  of  one  or 
more  hundred  shares  (dollars),  so  as  to  give  the  Company  an  opportunity  to  redeem 
it  with  Productive  Stock,  rather  than  coin,  if  they  shall  choose  to  do  so. 
Such  would  be  the  common  course  of  things  without  this  provision.  Yet  as  it 
may  sometimes  happen  that  it  would  be  for  the  interest  of  a holder  of  Circulating 
Stock,  of  a less  amount  than  one  hundred  shares  (dollars),  to  return  it  for  redemp- 
tion in  gold  or  silver,  rather  than  dispose  of  it  in  the  course  of  business,  it  is 
perhaps  proper  that  a redemption,  in  gold  and  silver,  should  be  provided.  This 
Article,  therefore,  provides  a redemption,  but  one  a little  less  favorable  than 
where  the  amount  is  one  or  more  hundreds. 

Where  a bank  is  prosperous,  and  above  the  necessity  of  transferring  Produc- 
tive Stock  at  all,  in  redemption  of  their  Circulation,  it  will  be  for  their  interest 
(as  promoting  the  reputation  of  the  bank)  to  redeem  their  Circulation  at  once, 
with  gold  and  silver,  when  presefited  in  amounts  less  than  SlOO,  rather  than 
receive  it  on  deposit  and  pay  interest. 


A MOKTGAGE  STOCK  BANKING  COMPANY. 


21 


ARTICLE  XXVIII. 

Productive  Stock  may  be  bought  back  from  the  Secondary 
holders,  and  Circulating  Stock  (presented  and  waiting  for 
redemption)  may  be  redeemed,  by  the  Company,  on  the  regular 
semi-annual  dividend  days,  without  giving  any  previous  notice  to 
the  holders  of  such  stock. 

But  if  the  Company  shall  ever  buy  back  Productive  Stock 
from  the  Secondary  holders,  or  shall  ever  redeem  Circulating 
Stock  (that  shall  have  been  presented,  and  be  waiting  for  I’edemp- 
tion)  at  any  time  other  than  on  a regular  semi-annual  dividend 
day,  they  shall  give  the  holder  of  such  Productive  or  Circida- 
ting  Stock  reasonable  notice  thereof  beforehand,  if  he  or  his 
known  attorney,  shall  be  a resident  of  the  State  of  Massachusetts, 
to  the  end  that  he  or  his  attorney  may  have  opportunity  to  be 
present,  and  receive  the  money  for  his  stock  at  the  time  it  shall 
be  tendered. 


ARTICLE  XXIX. 

All  the  resources  of  said  Company  (including  the  interest  on 
the  mortgages)  shall  be  applied  in,  and  only  in,  the  following 
manner,  giving  preference  to  each  of  the  several  classes  of  claims, 
liabilities,  and  obligations,  in  the  order  in  which  they  are  here 
enumerated,  to  wit : 

1.  To  the  payment,  in  full,  of  all  the  necessary  and  current 
expenses  of  the  Company,  and  any  and  all  liabilities  and  obliga- 
tions, of  every  name  and  nature  whatsoever,  except  those  here- 
after enumerated  in  this  Article. 

2.  To  the  payment,  in  full,  of  all  interest  due  on  certificates, 
scrip,  or  bills  of  Circidating  Stock,  that  shall  have  been  pre- 
sented, in  even  amounts  of  one  or  more  hundred  shares,  for 
redemption,  and  not  been  redeemed. 


ARTICLES  OF  ASSOCIATION  OF 


22 


3.  To  the  payment,  in  full,  of  a semi-annual  dividend,  of  six 
per  centum  per  annum,  on  all  such  Productive  Stock,  as  shall 
he  in  the  hands  of  Secondary  Stockholders. 

4.  To  the  redemption  of  all  such  certificates,  scrip,  or  bills  of 
the  Circulating  Stock.,  as  shall  havfe  been  presented,  in  even 
amounts  of  one  or  more  hundred  shares,  and  be  waiting  for 
redemption. 

5.  To  the  redemption  of  all  Circulating  Stock,  presented  and 
waiting  for  redemption,  in  amounts  less  than  one  hundred 
shares  ; with  interest  where  interest  shall  be  due. 

6.  To  the  re-purchase  of  all  such  Productive  Stock,  as 
shall  be  in  the  hands  of  Secondary  holders. 

7.  To  the  payment  of  all  loans  made  to  the  Company  by  the 
Primary  Stockholders,  with  interest  on  the  same,  at  a rate 
agreed  on,  not  exceeding  six  per  centum  per  annum. 

8.  To  the  payment  of  the  regular  salaries  of  the  Trustees, 
(independently  of  their  share  of  the  profits,)  and  any  compensa- 
tion that  may  be  allowed  to  the  President  of  the  Council. 

9.  To  the  payment  of  all  dividends,  made  ttp  exclusively  of 
interest  on  the  mortgages,  to  the  Primary  Stockholders.* 

10.  To  the  payment  of  dividends,  made  %ip  exclusively  of 
profits,  to  the  Primary  Stockholders,  and  to  the  Trustees 
their  proportion  of  the  profits.* 

And  especially  no  dividends,  made  up  either  of  interest  or 
profits,  shall  ever  be  paid  to  the  Primary  Stockholders,  until 
all  the  other  expenses,  liabilities,  obligations,  interest,  and  divi- 
dends (to  Secondary  Stockholders')  before  mentioned  to  be  paid, 

* It  is  necessary  that  a distinction  should  be  made  between  dividends,  made 
up  of  interest,  and  those  made  up  of  profits,  at  least  so  long  as  any  Pboductite 
Stock  shall  remain  in  the  hands  of  the  original  mortgagors,  or  their  assigns 
(holders  of  the  mortgaged  estates)  as  Peijiart  holders;  because  the  actual 
payment,  by  them,  of  interest,  wliich  is  to  be  at  once  returned  to  them  as  divi- 
dends, will  be  unnecessary  (see  Article  XLII).  The  Company  may  also  wish 
the  profits  to  accumulate  as  a reserved  fund,  instead  of  being  distributed ; when 
they  might  not  be  willing  actually  to  pay  interest  (not  otherwise  needed)  simply 
to  create  a reserved  fund. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


23 


shall  have  been  paid  in  full ; and  all  the  Circulating  Stocky 
presented  and  waiting  for  redemption,  shall  have  been  redeemed ; 
and  all  Productive  Stock,  in  the  hands  of  Secondary  holders, 
shall  have  been  re-purchased,  and  restored  to  its  Primary 
holders. 

ARTICLE  XXX. 

The  Trustees,  or  any  two  of  them,  or  the  sole  Trustee,  if  at 
any  time  there  should  be  but  one,  of  said  Boston  Banking  Com- 
pany, are  and  is  hereby  authorized  and  empowered  to  transfer  so 
much  Productive  Stock  of  the  Primary  Stockholders,  in 
redemption  of  the  Circulating  Stock  of  said  Company,  as  it  may 
become  necessary  or  proper  to  transfer  for  that  purpose. 

And  whenever  Productive  Stock  is  to  be  thus  transferred, 
from  a Primary  Stockholder,  in  redemption  of  Circidating 
Stock,  the  transfer  shall  be  made  upon  a book  kept  for  that 
purpose,  and  in  the  form  following,  (names,  dates,  and  numbers 
being  made  to  correspond  with  the  facts  in  each  case,)  to  wit : 


Cransfer  of  ^robuctik  Stork  iit  |lri)cmjition  of 
Circulating  Stock. 

[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Lvsander  Spooner, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United"  States,  for  the  District 
of  Massachusetts.] 

Boston,}  BOSTON  BANKING  COMPANY.  1 

Massachusetts. 

Transfer  No.  115.  Ten  Shares.  Nominal  value,  ^1000. 

From  0 0 , Primary  Stockholder. 

T o P P , Seco!  dtiry  Stockholder. 

Know  all  Men,  That  we,  A A . B B , 

and  C C , Trustees  [or  I,  A A , sole  Trustee] 

of  the  Boston  Banking  Company,  by  virtue  of  the  power  granted 


24 


ARTICLES  OF  ASSOCIATION  OF 


US  [or  me]  by  the  Articles  of  Association  of  said  Company,  dated 
January  1st,  1860,  do  hereby  transfer,  and  have  hereby  trans- 
ferred, Ten  shares  of  the  Productive  Stock  of  said  Company, 

from  0 0 , the  Primary  holder  thereof,  to  P 

P , of -,  in  the  County  of , in  the  State  of , 

in  redemption  of  an  equivalent  nominal  amount  of  the  Cir- 
culating Stock  of  said  Company.  Said  shares  are  numbered 
101,  102,  103,  104,  105,  106,  107,  108,  109,  and  110  respect- 
ively, [or — consecutively  from  101  to  110  inclusive,]  and  are  to 

be  holden  by  said  P P , as  a Secondary  Stockholder, 

and  subject  to  the  provisions  of  said  Articles  of  Association,  and 
especially  subject  to  the  right  of  said  Company  to  re-con vey  any 
or  all  of  said  shares  to  the  said  0 0 , or  his  representa- 

tives, whenever  said  Company  shall  have  tendered  or  paid  to  said 

P P , or  his  representatives,  in  gold  or  silver  coin,  the 

full  nominal  value  of  the  share  or  shares  to  be  so  re-conveyed, 
with  all  such  interest  and  dividends  thereon  as  shall  be  due  at 
the  time  of  such  re-conveyance. 

Dated  at  Boston,  this day  of , 1860. 

Trustees  of  the 
Boston  Banking 
Company. 

E E , Cashier. 


A A 

B B 

C C- 


ARTICLE  XXXI. 

The  Trustees,  or  any  two  of  them,  or  the  sole  Trustee,  if  at 
any  time  there  shall  be  but  one,  of  said  Boston  Banking  Com- 
pany, are  and  is  hereby  authorized  and  empowered  to  re-convey 
any  and  all  Productive  Stock  of  the  Secondary  Stockholders, 
to  the  Primary  holders,  from  whom  it  shall  have  been  taken, 
or  to  their  representatives,  upon  paying  or  tendering  to  said 
Secondary  Stockholders,  at  the  banking  house  of  said  Company, 


A MORTGAGE  STOCK  BANKING  COMPANY. 


25 


in  gold  or  silver  coin,  the  full  nominal  value  of  the  Productive 
Stock  so  re-conveyed,  with  all  such  interest  or  dividends  thereon 
as  may  be  due  at  the  time  of  such  re-conveyance. 

And  whenever  Productive  Stock  is  to  be  re-conveyed  from 
a Secondary  Stockholder  to  the  Primary  Stockholder,  from 
whom  it  shall  have  been  taken,  or  to  his  representatives,  the 
re-conveyance  shall  be  made  upon  a book  kept  for  that  purpose, 
and  in  the  form  following,  (names,  dates,  and  numbers  being 
made  to  correspond  with  the  facts  in  each  case,)  to  wit : 


le-toirfifpnfe  of  ^robuftik  Stock  from  a Scconkrg 
to  a Irimarg 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Lysandee  Spooner, 
in  the  Clerk’s  ofiBce  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 

Boston,}  BOSTON  BANKING  COMPANY.  { 3Iassacbu3ett3. 
Re-conveyance  No.  28.  Six  Shares.  Nominal  vahie,  i600. 

From  P P , Secondary  Stockholder. 

To  0 O , Primary  Stocrholdee. 

Know  all  Men,  That  we,  A A , B B , 

and  C C , Trustees  [or  I,  A A , sole  Trustee] 

of  the  Boston  Banking  Company,  by  virtue  of  the  power  granted 
us  [or  me]  by  the  Articles  of  Association  of  said  Company,  dated 
January  1st,  1860,  do  hereby  re-convey,  and  have  hereby  re- 
conveyed, Six  shares  of  the  Productive  Stock  of  said  Com- 
pany, from  P P , a Secondary  holder  thereof,  to  0 

0 , the  Primary  holder  thereof;  having  tendered  [or  paid] 

4 


AKTICLES  OP  ASSOCIATION  OP 


L>6 


to  said  P P , in  gold  or  silver  coin,  the  full  nominal 

value  of  said  Six  shares,  and  all  interest  and  dividends  due 
thereon,  up  to  this  date.  Said  shares  are  numbered  101,  102, 
103,  104,  105,  and  106,  respectively,  [or — consecutively  from 

101  to  106  inclusive,]  and  were  transferred  from  said  0 

0 to  said  P P , on  the  day  of , 

1860,  in  redemption  of  Circulating  Stock. 

Dated  at  Boston,  this day  of , 1860. 

Trustees  of  the 
Boston  Banking 
Company. 

E E , Cashier. 


A A 

B B 

C C- 


ARTICLE  XXXII. 

Whenever  Productive  Stock  shall  be  transferred,  by  the 
Trustees,  in  redemption  of  Circulating  Stock,  credit  for  the 
same  shall  be  given,  in  a book  kept  for  that  purpose,  to  the 
Primary  Stockholder,  from  whom  it  shall  have  been  taken. 
And  when  such  Productive  Stock,  or  any  part  thereof,  shall 
be  re-conveyed  to  such  Primary  Stockholder,  or  to  his  repre- 
sentatives, the  proper  debit  shall  be  entered  against  the  original 
credit. 


ARTICLE  XXXIII. 

The  Trustees  shall  grant  to  each  and  every  Primary  Stock- 
holder, a certificate,  or  certificates,  for  his  or  her  Productive 
Stock,  in  the  following  form,  (names,  dates,  and  numbers  being 
made  to  correspond  with  the  facts  in  each  case,)  to  wit ; 


A MORTGAGE  STOCK  BANKING  COMPANY. 


27 


^rimarg  StucWjokr's  fctifeate  of  ^^rokdik  Stock 

OF  THE  FOLLOWING  NAMED 


MORTGAGE  STOCK  BANKING  COMPANY. 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsander  Spooner, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 

Capital  Stock,  $ 100,000: 

In  Mortgages  hearing  Seven  per  Cent.  Interest. 

Productive  Stock,  $100  per  Share. 

Boston,}  BOSTON  BANKING  COMPANY.  I MTachfseSs^' 

Certificate  No.  64.  Seven  Shares.  Nominal  value,  $700. 

Be  it  Known,  That  F F , of  Boston,  in  the  County 

of  Suffolk,  in  the  State  of  Massachusetts,  is  the  proprietor,  and  a 
Primary  holder,  of  Seven  Shares  of  the  Productive  Stock 
of  the  Boston  Banking  Company  : a Mortgage  Stock  Bank- 
ing Company,  having  their  Banking  House  at  Boston,*  in  the 
County  of  Suffolk,  in  the  State  of  Massachusetts ; which  shares 
are  numbered  91,  92,  93,  94,  95,  96,  and  97,  respectively  [or — 
consecutively  from  91  to  97  inclusive],  and  are  of  the  nominal 
value  of  Seven  Hundred  Dollars,  and  are  holden  by  said 
F F , as  a Primary  holder,  and  subject  to  the  pro- 

visions of  the  Articles  of  Association  of  said  Boston  Banking 
Company,  dated  January  1st,  1860  ; and  are  transferable  only 
by  written  assignment,  of  the  form  subjoined ; the  transfer  to  be 
complete  only  on  the  assignment  being  recorded  in  the  books  of 


28 


ARTICLES  OF  ASSOCIATION  OF 


the  Company,  and  the  surrender  of  this  certificate,  when  a new 
one  will  he  issued. 

Dated  at  said  Boston,  this  tenth  day  of  August,  1860. 


[SEAL.] 


Trustees  of  the 
Boston  Banking 
Company. 


E E , Cashier. 


To  the  above  certificate  shall  be  added  a blank  conveyance,  in 
the  following  form,  (names,  dates,  and  numbers  being  made  to 
correspond  with  the  facts  in  each  case,)  to  wit : 


Irimarg  SWljolkf s Sale  of  Sroburtibe  Stock 


OF  THE  FOLLOWING  NAMED 


MORTGAGE  STOCK  BANKING  COMPANY. 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsandee  Spooner, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 


Capital  Stock,  $100,000: 

In  Mortgages  hearing  Seven  per  Cent.  Interest. 
Productive  Stock,  $100  per  Share. 

Boston,}  BOSTON  BANKING  COMPANY. 

Shares.  Nominal  value,  $ . 

Know  all  Men,  That  I, , of , in  the  County 

of , in  the  State  of , being  the  true  owner,  and  a 

Primary  holder  of Share  of  the  Productive  Stock 


A MORTGAGE  STOCK  BANKING  COMPANY. 


29 


of  the  Boston  Banking  Company  : a Mortgage  Stock  Bank- 
ing Company,  having  its  Banking  House  in  Boston,  in  the 
County  of  Suffolk,  in  the  State  of  Massachusetts  ; which  share  , 

numbered respectively,  [or — consecutively  from 

to inclusive,]  for  value  received,  have  given,  granted,  sold, 

and  assigned,  and  do  hereby  give,  grant,  sell,  and  assign  to , 

of , in  the  County  of , in  the  State  of , 

heirs  and  assigns  forever,  the  said share  of  Productive 

Stock,  and  all  my  right,  title,  interest,  and  property  in  and  to 

the  same.  To  have  and  to  hold  the  same  to  the  said , 

heirs  and  assigns,  as  Primary  holders  thereof,  to  their 

sole  use  and  benefit,  subject  only  to  the  Articles  of  Association 
of  said  Company ; which  Articles  are  dated  January  1st,  1860. 


Witness  my  hand  and  seal,  this day  of 

in  the  year  18 — . 


Witness. 


Boston, , 18 — . Kecorded  in  the  book  of  Sales  of 

Productive  Stock  by  Primary  Stockholders,  No.  , 

Page . 

E E , Cashier. 


ARTICLE  XXXIV. 

The  Trustees  shall  grant  to  each  and  every  Secondary  Stock- 
holder a certificate,  or  certificates,  for  his  or  her  Productive 
Stock,  in  the  following  form,  (names,  dates,  and  numbers  being 
made  to  correspond  with  the  facts  in  each  case,)  to  wit : 


30 


ARTICLES  OF  ASSOCIATION  OF 


Bwontori  Cn“ti&atc  ijf  |r0ljadilji  ^tork 

OF  THE  FOLLOWING  NAMED 


MORTGAGE  STOCK  BANKING  COMPANY. 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsandee  Spoonee, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 

Capital  Stock,  $100,000: 

In  Mortgages  bearing  Seven  lier  Cent.  Interest. 

Productive  Stock,  $100  per  Share. 

Secondary  Stockholders  are  paid  Dividends  of  Six  per  cent, 
per  annum. 

Boston,)  BOSTON  BANKING  COMPANY.  ) 

Massachiisetts. 

Certificate  No.  25.  Nine  Shares.  Nominal  value,  $900. 

Be  IT  Known,  That  L L , of  Roxbury,  in  the 

County  of  Norfolk,  in  the  State  of  Massachusetts,  is  a Secondary 
holder  of  Nine  Shares  of  the  Productive  Stock  of  the 
Boston  Banking  Company  : a Mortgage  Stock  Banking 
Company,  which  has  its  Banking  House  at  Boston,  in  the  County 
of  Suffolk,  in  the  State  of  Massachusetts ; which  shares  are  num- 
bered 31,  32,  33,  34,  35,  36,  37,  38,  and  39,  respectively,  [or — 
consecutively  from  31  to  39  inclusive,]  and  are  of  the  nominal 
value  of  Nine  Hundred  Dollars;  and  are  holden  by  said 

L L , as  a Secondary  holder,  subject  to  the  provisions 

of  the  Articles  of  Association  of  said  Boston  Banking  Company, 


A MORTGAGE  STOCK  BANKING  COMPANY. 


31 


dated  January  1st,  1860  ; and  are  transferable  only  by  a written 
assignment  of  the  form  subjoined ; the  transfer  to  be  complete 
only  on  the  assignment  being  recorded  in  the  books  of  the  Com- 
pany, and  the  surrender  of  this  certificate,  when  a new  one  will 
be  issued. 

Dated  at  said  Boston^  this  2i)th  day  of  March^  1860. 

• ')  Trustees  of  the 

[seal.]  B B . V Boston  Banking 

C C . 1 Company, 

E E , Cashier. 

To  the  above  certificate  shall  be  added  a blank  conveyance  in 
the  following  form,  to  wit : 


OF  THE  FOLLOWING  NAMED 

MORTGAGE  STOCK  BANKING  COMPANY. 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsander  Spooner, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 

Capital  Stock,  ^100,000: 
hi  Mortgages  hearing  Seven  joer  Cent.  Interest. 
Productive  Stock,  $100  per  Share. 

Secondary  Stockholders  are  paid  Dividends  of  Six  per  cent, 
per  annum. 

Boston,}  BOSTON  BANKING  COMPANY. 

Shares.  Nominal  value,,  $ . 

Be  it  Known,  That  I, , of , in  the  County 

of , in  the  State  of , being  the  true  owner,  and  a 


82 


ARTICLES  OF  ASSOCIATION  OF 


Secondary  holder  of share  of  Productive  Stock  of  the 

Boston  Bankinu  Company  : a Mortgage  Stock  Banking 
Company,  having  its  Banking  House  in  Boston,  in  the  County 

of  Suffolk,  in  the  State  of  Massachusetts ; which  share  , 

numbered respectively,  [or — consecutively  from to 

inclusive]  for  value  received,  do  hereby  give,  grant,  sell, 

and  assign,  and  have  hereby  given,  granted,  sold,  and  assigned, 

to , of , in  the  County  of , in  the  State 

of , all  my  right,  title,  interest,  and  property  in  and  to 

the  said share  of  Productive  Stock. 

To  have  and  to  hold  the  same  to  the  said , heii’s 

and  assigns,  as- Secondary  holders,  and  not  otherwise,  to  their 
sole  use  and  benefit,  subject  only  to  the  Articles  of  Association 
of  said  Boston  Banking  Company  ; which  Articles  are  dated 
January  1st,  1860. 

Witness  niy  hand  and  seal,  this day  of , hi 

the  year  18 — . 

Witness. 

Boston, , 18 — . Recorded  in  the  book  of  Sales 

of  Productive  Stock  by  Secondary  Stockholders,  No. , 

Page 

E E , Cashier. 


ARTICLE  XXXV. 

Whenever  Productive  Stock  of  said  Company  shall  have 
been  transferred  to,  and  be  in  the  hands  of,  a Secondary  Stock- 
holder, and  the  Primary  Stockholder,  from  whom  it  shall 
have  been  taken,  or  his  representatives,  shall  wish  to  convey  all 
his  or  their  right  and  property  in  it,  and  all  his  or  theii'  right 
and  claim  to  have  it  re-purchased  and  restored  to  him  or  them  by 


§ BEAL.  0 


A MORTGAGE  STOCK  BANKING  COMPANY. 


33 


the  Company,  the  conveyance  of  such  right,  property,  and  claim 
shall  he  made  in  the  following  form,  (names,  dates,  and  numbers 
being  made  to  correspond  with  the  facts  in  each  case,)  to  wit ; 


OF  ms  RIGHT  TO  PRODUCTIVE  STOCK  IN  THE  HANDS  OF  A 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsander  Spooner, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 


Boston,}  BOSTON  BANKING  COMPANY.  l^aTcMseS^.' 


Twelve  Shares.  Nominal  value,  $1,200. 

Whereas,  on  or  before  the  tenth  day  of  September,  1860, 
Twelve  Shares  of  the  Productive  Stock  of  the  Boston  Bank- 
ing Company,  (a  Mortgage  Stock  Banking  Company,  having 
its  Banking  House  in  Boston,  in  the  County  of  Suffolk,  and  State 

of  Massachusetts,)  being  then  the  property  of  F F , 

of , in  the  County  of , in  the  State  of , as 

a Primary  holder  thereof,  and  being  numbered  63,  64,  65,  66, 
67,  68,  69,  70,  71,  72,  73,  and  74,  respectively,  [or — consecu- 
tively from  63  to  74  inclusive,]  were  transferred,  by  the  Trustees 

of  said  ' Company,  from  said  F F , to  K K , 

of , in  the  County  of , in  the  State  of , in 

redemption  of  Circulating  Stock ; and  are  now  holden  by  said 


SECONDARY  STOCKHOLDER. 


Capital  Stock,  $100,000; 

In  Mortgages  hearing  Seven  -per  Cent.  Interest. 

Productive  Stock,  $100  per  Share. 


84 


ARTICLES  OF  ASSOCIATION  OF 


K K , his  heirs  or  assigns,  as  Secondary  holder  or 

holders  thereof. 

And  whereas  said  Company  are  hound  by  the  Articles  of 
Association  of  said  Company,  (dated  January  1st,  I860,)  to 
re-purchase  said  shares  of  Productive  Stock,  and  restore  them 

to  said  P F , or  his  representatives,  if  the  resources  of 

said  Company  will  enable  them  to  do  so  consistently  with  said 
Articles  of  Association. 

And  whereas,  as  will  appear  by  the  records  of  said  Company, 

I,  M M , of , in  the  County  of , in 

the  State  of , now  have,  hold,  and  possess,  all  the 

rights  in  said  shares  of  Productive  Stock,  which  he,  the 

said  F F , or  his  representatives  can  have,  hold,  or 

possess,  to  wit, — the  right  and  claim  to  have  said  shares  re-pur- 
chased  by  said  Company,  and  restored  to  the  Primary  holder 
thereof,  his  heirs  or  assigns,  provided  such  re-purchase  can  be 
made  consistently  with  said  Articles  of  Association. 

Now,  therefore,  be  it  known  that  I,  the  said  M M , 

for  value  received,  have  given,  granted,  sold,  and  assigned,  and 

do  hereby  give,  grant,  sell,  and  assign  to  S S , of 

, in  the  County  of , in  the  State  of , all  my  right, 

title,  and  interest  in  said  Twelve  Shares  of  Productive  Stock, 
III  and  all  my  right  and  claim  to  have  the  same  re-purchased  and 
restored  to  me  by  said  Company.  And  I hereby  request,  author- 
ize, and  require  the  Trustees  of  said  Boston  Banking  Com- 
pany, whenever  (if  ever)  they  shall  re-purchase  said  shares,  or 
any  of  them,  from  the  Secondary  holder  thereof,  to  convey  the 

same  to  the  .said  S S ,’  his  heirs  or  assigns,  instead  of 

restoring  them  to  myself,  my  heirs  or  assigns.  To  have  and  to 

hold  the  same  to  the  said  S S , his  heirs  and  assisns 

forever,  as  Primary  holders  thereof. 


Witness  my  hand  and  seal,  this 
the  year  18 — . 


day  of 


M- 


M- 


Witness  Y- 


§ SEAL,  p 


A MORTGAGE  STOCK  BANKING  COMPANY. 


35 


Boston,  October  10,  18 — . Recorded  in  the  book  of  Sales 
bj  Primary  Stockholders,  of  their  Right  to  Productive 

Stock  in  the  hands  of  Secondary  Stockholders,  No. , 

Page . 

E E , Cashier.* 

And  such  sale  shall  not  be  complete  until  the  above  Deed  shall 
be  recorded  by  the  Company,  in  a book  kept  by  them  for  that 
purpose.  Nor  shall  any  dividend  be  paid  to  the  grantee,  named 
in  said  Deed,  until  the  Deed  shall  have  been  recorded  as  afore- 
said, and  a new  certificate  or  certificates  for  the  stock  issued  to 
him. 


ARTICLE  XXXVI. 

The  Trustees  are  hereby  authorized,  and  if,  in  their  judgment, 
it  shall  he  necessary  or  expedient,  they  are  required,  to  pay  the 
taxes  on  any  or  all  the  mortgaged  estates  before  mentioned,  and 
to  keep  all  buildings  and  fixtures  on  each  of  said  estates,  insured, 
at  the  expense  of  each  estate  respectively,  for  the  benefit  of  said 
Company.  And  the  amount  of  such  taxes,  and  the  expense  of 
such  insurance,  and  all  necessary  and  proper  expenses,  incurred 
by  the  Company,  in  and  about  such  insurance,  and  in  recovering 
the  amount  insured  (having  been  first  paid  or  assumed  by  the 
Company),  shall  be  payable  to  the  Company,  by  the  mortgagor, 
or  his  representatives  (the  holders  of  the  mortgaged  estate)  with 
interest  (at  the  rate  of  six  per  centum  per  annum)  on  the  day  on 
which  his  or  their  next  semi-annual  interest  on  the  mortgage  shall 
become  due. 

Any  moneys  recovered  by  the  Company  on  the  insurance  of 
any  mortgaged  estate  before  mentioned,  shall  be  applied  in  the 
following  manner,  to  wit : 

* The  form  of  the  above  Deed  is  somewhat  awkward,  owing  to  the  fact  that 
it  was  necessary  to  adapt  it  to  the  cases  of  all  sales,  whether  by  the  Primary 
Stockholder  himself,  (from  whom  the  stock  should  have  been  transferred,)  or 
by  his  heirs  or  assigns.  Had  it  been  necessary  to  adapt  the  form  only  to  the  first 
of  these  cases,  it  might  have  been  made  a little  more  simple. 


36 


ARTICLES  OF  ASSOCIATION  OF 


1.  To  the  payment  of  all  expenses,  incurred  by  the  Company, 
for,  or  on  account  of,  such  insurance,  or  in  recovering  the  amount 
insured ; and  also  the  amount  paid  as  taxes,  iv ith  interest  on  all 
such  sums  from  the  time  they  were  paid. 

2.  To  the  payment  of  any  interest  that  may  be  due,  and  re- 
maining unpaid,  upon  the  mortgage  of  said  estate. 

Of  the  sum,  if  any,  then  remaining  of  said  insurance  money, 
one  or  more  of  the  following  dispositions  shall  he  made,  at  the 
discretion  of  the  Trustees,  to  wit : 

3.  If  the  then  present  holder  or  holders  of  the  mortgaged  estate, 
shall  be  a Primary  holder  or  holders  of  any  Productive 
Stock,  the  Trustees  may  cancel  the  same,  and  pay  over  to  him 
or  them  an  equivalent  nominal  amount  of  the  insurance  money, 
provided  they  can  do  so  without  injustice  to  any  one,  and  es- 
pecially without  throwing  any  unjust  or  unequal  burdens  upon 
the  other  Primary  holders. 

And  if  any  profits  or  dividends  shall  be  equitably  due,  on  the 
Productive  Stock  thus  cancelled,  they  shall  be  paid. 

4.  Or  the  said  insurance  money  may  be  appropriated  to  the 
use  of  the  Company,  and  in  consideration  thereof  the  Company 
shall  incur  the  obligation  to  cancel  an  equivalent  nominal  amount 
of  Productive  Stock.  And  if  they  shall  be  able  to  purchase 
the  Productive  Stock  to  be  cancelled,  by  paying  less  than  its 
nominal  value,  the  profit  shall  belong  to  the  Company.  But  if, 
in  order  to  get  the  necessary  amount  of  Productive  Stock,  to 
be  cancelled,  it  shall  be  necessary  for  them  to  pay  more  than  its 
nominal  value,  the  loss  shall  fall  upon  the  Company. 

5.  And  if  the  amount  of  said  insurance  money  shall  not  be 
precisely  equal,  in  nominal  amount,  to  the  nominal  value  of  any 
number  of  shares  of  Productive  Stock,  the  remainder,  or  frac- 
tional part  of  the  nominal  value  of  one  share  of  Productive 
Stock,  shall  either  be  paid  over  to  the  holder  of  the  mortgaged 
estate,  and  no  reduction  in  the  mortgage  be  made  on  account  of 
such  remainder,  or  fractional  part ; or  it  shall  be  retained  by  the 
Trustees,  and  applied  to  the  payment  of  any  future  interest  on 
the  mortgage,  or  taxes  on  the  mortgaged  property,  or  of  any 


A MOKT&AGB  STOCK  BANKING  COMPANY. 


37 


future  expenses  for,  or  on  account  of,  the  insurance  of  the  prop- 
erty mortgaged ; or  the  Trustees  may,  if  they  deem  it  expedient, 
accept  it  as  the  equivalent  of  another  share  of  Peoductive 
Stock,  which  share  shall  be  cancelled  at  the  expense  of  the 
Company. 

And  whenever  any  Productive  Stock  shall  be  cancelled,  as 
provided  for  in  this  Article,  an  equivalent  nominal  amount  of 
Circulating  Stock  shall  also  be  cancelled.  And  the  mortgage 
on  the  estate  shall  also  he  released,  in  whole,  or  in  part,  as  the 
case  may  require. 


ARTICLE  XXXVII. 

If  ever  the  interest  on  any  of  the  aforesaid  mortgages,  or  the 
money  paid  by  the  Company  for  taxes,  (with  interest  on  the 
same,)  or  for,  or  on  account  of,  insurance  on  any  of  the  mortgaged 
property,  (with  interest  on  the  same,)  shall  not  be  paid  when  it 
shall  become  due,  the  Trustees  may,  in  their  discretion,  proceed 
in  any  one  or  more  of  the  following  modes,  to  wit : 

1.  The  Trustees  may  take  possession  of  the  mortgaged  prop- 
erty, and  apply  the  rents  and  profits  thereof  to  the  payment  of 
the  interest  due  on  the  mortgage,  and  the  money  due  for  taxes, 
or  for,  or  on  account  of,  insurance,  and  all  expense  and  trouble 
incurred  by  the  Trustees  in  managing  said  mortgaged  estate. 

2.  If  the  owner  or  owners  of  the  mortgaged  property  shall  be, 
at  the  time,  a Primary  holder  or  holders  of  any  Productive 
Stock  of  the  Company,  the  Trustees,  if  they  can  do  so  without 
injustice  to  any  one,  and  without  throwing  any  unjust  or  unequal 
burden  upon  other  Primary  Stockholders,  may  cancel  any 
amount  of  such  Productive  Stock,  not  exceeding  the  nominal 
amount  of  the  mortgage,  and  then  release  the  mortgage  for  a 
corresponding  amount.  But  such  Productive  Stock  shall  not 
be  thus  cancelled,  without  giving  the  holder  or  holders  thereof  at 

least months’  notice  that  it  will  be  cancelled,  unless  payment 

be  made. 


38 


ARTICLES  OF  ASSOCIATION  OF 


3.  If  any  of  the  conditions  of  the  mortgage  shall  remain 

unfulfilled  for  the  space  of months,  the  Trustees  may  sell 

the  mortgaged  estate,  at  public  auction,  after  having  properly 

advertised  the  same  for  sale,  at  least  once  in  each  of  the 

successive  weeks  next  preceding  the  sale,  in newspapers  in 

the  county,  where  the  estate  is  situated.  Out  of  the  proceeds  of 
the  sale,  the  Trustees  shall  first  pay  all  expenses  of  said  sale,  and 
all  interest  due  on  the  mortgage,  and  all  money  remaining  unpaid, 
that  shall  have  been  expended  by  the  Company,  for  taxes,  and 
for  or  on  account  of  insurance,  on  said  mortgaged  property,  with 
interest  on  the  same. 

Out  of  the  amount  then  remaining  from  the  proceeds  of  the 
sale,  a sum  equal  to  the  nominal  amount  of  the  mortgage,  (if  so 
much  there  shall  be,)  shall  go  into  the  treasury  of  the  Company; 
and  the  excess,  if  any  there  shall  be,  shall  be  paid  over  to  the 
mortgagor,  or  his  representatives  (the  holders  of  the  mortgaged 
estate). 

And  in  consideration  of  the  sum,  that  shall  thus  have  gone 
into  the  treasury  of  the  Company,  (even  though  it  shall  be  less 
than  the  nominal  amount  of  the  mortgage,)  the  Company  shall 
incur  the  obligation  to  cancel  an  amount  of  Productive  Stock 
nominally  equal  in  value  to  the  nominal  amount  of  the  mortgage. 
And  if  they  shall  be  able  to  purchase  and  cancel  the  necessary 
amount  of  Productive  Stock,  by  paying  a less  sum  for  it  than 
that  which  shall  have  gone  into  the  treasury  of  the  Company  as 
aforesaid,  the  profit  shall  belong  to  the  Company.  But  if,  in 
order  to  get  the  necessary  amount  of  Productive  Stock  to  be 
cancelled,  they  shall  be  compelled  to  pay  more  than  the  amount 
that  shall  have  gone  into  the  treasury  of  the  Company  as  afore- 
said, the  loss  shall  fall  on  the  Company.* 

Whenever  any  Productive  Stock  shall  be  cancelled,  in  pur- 
suance of  this  Article,  an  equivalent  nominal  amount  of  Circu- 
lating Stock  shall  also  be  cancelled. 

* This  provision  makes  the  mortgages  mutually  responsible  for  the  solvency 
or  sufficiency  of  each  other. 


A MORTGAGE  STOCK  BANKETO  COMPANY. 


89 


ARTICLE  XXXVIII. 

If  any  holder  or  holders  of  any  of  the  before-named  mortgaged 
estates  shall,  at  any  time,  'wish  to  have  his  or  their  estate  released 
from  the  mortgage,  and  shall  also  be,  at  the  same  time,  a Pri- 
mary HOLDER  or  HOLDERS  of  PRODUCTIVE  Stock,  the  Trustees, 
with  the  consent  of  the  Council,  may  cancel  such  stock,  and 
release  the  mortgage  for  a corresponding  amount,  provided  it  can 
be  done  without  injustice  to  any  one,  and  without  throwing  any 
unjust  or  unequal  burden  upon  other  Primary  holders  of  Pro- 
ductive Stock. 

And  whenever  any  Productive  Stock  shall  be  cancelled,  in 
pursuance  of  this  Article,  an  equivalent  nominal  amount  of  Cir- 
culating Stock  shall  also  be  cancelled. 


ARTICLE  XXXIX. 

Whenever  any  shares  of  either,  Productive  or  Circulating 
Stock  shall  be  cancelled,  a record  shall  be  preserved  of  the  par- 
ticular numbers  borne  by  such  shares  respectively. 


ARTICLE  XL. 

The  regular  semi-annual  dividend  days  shall  be  the  fii'st  days 
of  January  and  July,  annually.  Provided,  however,  that  when 
either  of  those  days  shall  fall  on  a Sunday,  the  Monday  next 
succeeding  shall  be  the  dividend  day. 


ARTICLE  XL  I. 

No  dividends  shall  ever  be  paid  to  any  of  the  Primary  Stock- 
holders, except  from  interest,  that  shall  actually  have  accrued 
on  the  mortgages,  and  bona  fide  profits  already  realized  by  the 
Company. 


40 


ARTICLES  OP  ASSOCIATION  OP 


Nor  shall  any  dividends,  of  jJrqfits,  (independently  of  interest 
on  the  mortgages,)  ever  be  paid  to  the  Primary  Stockholders, 
except  with  the  consent  of  the  Council.* 


ARTICLE  XLII. 

Whenever  the  owner  of  any  of  the  before-named  mortgaged 
estates  shall  be  a Primary  holder  of  any  Productive  Stock, 
the  actual  payment  of  no  more  interest  shall  be  required  of  him, 
than  shall  be  needed  (and  be  due  from  him  as  his  proportion)  to 
meet  the  obligations  of  the  Company.  But  the  remainder  shall 
be  credited  to  him,  as  having  been  paid  by  him,  and  then  debited 
to  him  as  dividend  paid,  the  same  as  if  it  had  actually  been  paid 
by  him  as  interest,  and  then  actually  repaid  to  him  as  dividend.! 

And  whenever  the  Trustees  shall  foresee  that  the  liabilities  of 
the  Company  are  likely  to  render  it  necessary  that  a mortgagor, 
(or  owner  of  mortgaged  estate,)  and  Primary  holder  of  Pro- 
ductive Stock,  shall  make  an  actual  payment  of  the  whole,  or 
any  part,  of  the  interest  on  his  mortgage,  at  the  next  semi-annual 
period,  at  which  such  interest  will  become  due,  they  shall  give 
him  notice  of  such  necessity,  as  soon  as  it  shall  become  evident 
to  them  that  such  necessity  is  likely  to  exist. 


ARTICLE  XLII  I. 

Accumulated  profits  of  the  Company  may  be  loaned  by  the 
Company. 

* See  Note  to  Article  XXIX,  page  22. 

t So  long  as  the  bank  is  prosperous,  and  the  Peodtjctite  Stock  shall 
remain  in  the  hands  of  the  mortgagors,  or  the  owners  of  the  mortgaged  estates, 
there  will,  of  course,  he  no  need  that  the  interest  be  paid  at  all ; because,  if 
actually  paid  in  as  interest,  it  would  have  to  he  immediately  paid  back  to  the 
same  persons  as  dividend.  All  that  will  be  necessary,  therefore,  will  be,  that  the 
interest  be  simply  credited  as  interest,  and  then  debited  as  dividend,  to  the  same 
persons,  without  any  actual  payment  being  made  of  either  interest  or  dividend. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


41 


ARTICLE  XLIV. 

No  promissory  note,  or  other  evidence  of  debt,  discounted  by, 
and  running  to,  said  Boston  Banking  Company,  shall  ever,  unless 
with  the  written  consent  of  all  makers  and  indorsers,  who  shall 
he  liable  thereon,  be  sold  or  transferred  by  said  Company,  until 
after  it  shall  have  become  due.* 


ARTICLE  XL  V. 

1.  Any  person  who  shall  be  a holder  (whether  Primary,  or 
Secondary^  or  both)  of  Twenty  Shares  of  the  Productive 
Stock  of  said  Company,  may,  for  the  time  being,  either  be  a 
Councillor,  or  appoint  one  in  his  stead,  at  his  election.  And  for 
every  additional  Twenty  Shares,  so  owned  by  him,  he  may  ap- 
point an  additional  Councillor,  f 

* The  purpose  of  this  Article  is  to  furnish  a guaranty  to  borrowers  of  Circu- 
lating Stock,  that  they  will  be  able  to  pay  their  debts  to  the  bank  in  the  same 
currency,  which  they  receive  of  the  bank.  If  the  bank  could  transfer  a note, 
which  it  had  discounted,  the  maker  might  be  compelled  to  pay  it  with  specie. 
The  Article  will  be  beneficial  to  the  bank  itself,  because  it  gives  the  public  a 
guaranty  that  the  bills  of  the  bank  will  all  be  wanted  to  pay  debts  due  the  bank. 
It  thus  tends  to  give  to  the  bills  the  same  value  as  gold  and  silver,  in  the  estima- 
tion of  the  public,  and  thus  promote  their  circulation. 

The  Article  also  tends  to  put  it  out  of  the  power  of  the  officers  of  the  bank  to 
embezzle  its  funds. 

The  argument,  that  it  might  sometimes  be  advantageous  for  the  bank  to 
transfer  a doubtful  note,  before  it  should  become  due,  is  of  little  weight.  If  a 
debt  be  bad,  the  loss  of  it  may  as  well  fall  upon  the  bank  as  upon  any  body  else. 
And  the  knowledge  that  this  must  be  the  case,  will  make  the  bank  more  cautious 
as  to  its  loans.  Besides,  a case  would  but  rarely  happen,  where  the  bank  would 
be  benefitted  by  transferring  a note.  And  then  the  gain  would  be  less  than  the 
loss  arising  to  the  credit  of  the  bills  of  the  bank,  in  consequence  of  any  uncer- 
tainty as  to  their  being  wanted  to  pay  debts  due  the  bank. 

The  right  of  the  bank  to  transfer  a note,  after  it  shall  have  become  due, 
is  the  only  right  that  the  bank  really  needs,  or  that  it  would  be  expedient  to 
exercise. 

t As  the  powers  of  the  Councillors  are  mostly  advisory,  rather  than  authori- 
tative, the  name  of  Councillors  is  more  appropi  iate  than  that  of  Directors. 

6 


42 


ARTICLES  OP  ASSOCIATION  OP 


2.  All  persons,  who  shall  be  respectively  holders  (whether 
Primary,  or  Secondary^  or  both)  of  less  than  Twenty  Shares  of 
Productive  Stock,  may  unite  to  choose,  by  ballot,  so  many 
Councillors  as  their  Productive  Stock  may  entitle  them  to 
choose,  choosing  one  Councillor  for  every  Twenty  Shares.  In 
thus  choosing  Councillors,  each  Stockholder  shall  be  entitled  to 
one  vote  for  each  share  of  his  Productive  Stock.  These 
Councillors  shall  be  chosen  on  each  of  the  semi-annual  dividend 
days,  and  shall  hold  their  offices  until  the  dividend  day  next  suc- 
ceeding the  one  on  which  they  shall  be  chosen.  The  Stock- 
holders, named  in  this  provision,  shall  be  furnished,  by  the  Trus- 
tees, with  suitable  accommodations  for  their  meetings  (for  the 
choice  of  Councillors),  in  the  banking  house  of  the  Company. 

3.  The  Board  of  Councillors  may,  by  ballot,  choose  their 
President.  He  shall  hold  his  office  only  until  the  dividend  day 
next  after  his  election.  But  he  may  be  re-elected.  Whenever 
there  shall  be  no  President,  in  office,  by  election,  the  largest 
holder  of  Productive  Stock,  who  shall  be  a member  of  the 
Council,  shall,  for  the  time  being,  be  the  President. 

4.  The  Councillors  shall  keep  a record  of  their  proceedings ; 
may  choose  their  own  Secretary,  and  fix  his  salary ; except  that 

it  shall  not  exceed  dollars  per  annum,  unless  with  the 

consent  of  the  Trustees. 

5.  The  Councillors,  by  a majority  vote  of  their  whole  number, 
may  fix  their  regular  times  of  meeting,  and  the  number  that  shall 
constitute  a quorum  for  business. 

6.  The  Councillors  shall,  at  all  reasonable  times,  have  access 
(so  far  as  it  shall  be  necessary  for  purposes  of  investigation)  to 
all  the  books  and  papers  of  the  Company ; and  shall  be  entitled 
to  be  informed  of  all  the  business  affairs  of  the  Company.  The 
Council,  or  a Committee  thereof,  appointed  for  the  purpose,  shall 
also  be  consulted  beforehand,  by  the  Trustees,  on  all  important 
transactions,  if  circumstances  will  reasonably  admit  of  it. 

7.  The  Council,  or  a Committee  thereof,  appointed  for  the 
purpose,  shall  have  a veto  upon  any  and  all  loans  or  discounts 
proposed  to  be  made  by  the  Trustees. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


43 


8.  The  Councillors  shall  receive  no  salaries  for  their  services. 

But  the  President  of  the  Council  may,  by  vote  of  the  Council, 
receive  a salary  not  exceeding dollars  for  six  months. 

9.  The  Councillors  shall  have  suitable  accommodations  for 
their  meetings  furnished  to  them,  by  the  Trustees,  in  the  banking 
house  of  the  Company. 


ARTICLE  XLVI. 

1.  The  Trustees  shall  keep  books  fully  showing  the  pecuniary 
standing,  and  all  the  pecuniaiy  transactions,  of  the  Company. 

2.  The  Trustees  shall  have  two  seals ; with  one  of  which  they 
shall  seal  all  certificates  of  Productive  Stock  granted  to 
Primary  Stockholders,  and  with-  the  other  all  certificates  of 
Productive  Stock  granted  to  Secondary  Stockholdejs.  They 
may  also,  if  they  deem  it  expedient,  and  have  the  consent  of  the 
Council,  have  a third  seal,  and  with  it  seal  any  or  all  certificates 
of  Circulating  Stock. 

3.  The  Trustees  shall  consult  the  Council,  or  a Committee 
thereof,  appointed  for  the  purpose,  in  all  important  matters,  when 
reasonably  practicable,  and  shall  conform  to  their  advice  so  far  as 
they  can  consistently  with  their  (the  Trustees’)  opinion  of  what 
is  just  to  all  holders  of  either  Productive  or  Circidating 
Stock,  and  safe  and  proper  for  the  best  pecuniary  interests  of  the 
Company.* 

* It  would  not  be  proper  to  make  the  power  of  the  Councillors  authoritative 
over  the  Trustees,  because  the  very  nature  of  the  system  makes  the  Trustees  the 
attorneys  of  three  different  classes  of  Stockholders,  to  wit ; the  Pbimaet  and 
Secondary  holders  of  PnontrCTivE  £tock,  and  the  holders  of  Circulating  Stock. 
Legally  speaking,  the  individuals  composing  one  of  these  classes,  are  as  much 
Stockholders  as  either  of  the  others.  The  holders  of  the  Circulating  Stock  have 
rights  iu  the  Company,  which  are  as  strictly  legal  as  those  of  the  Pkimaet  or 
Secondary  holders  of  Peoductite  Stock.  Yet  they  have  no  voice  in  choosing 
the  Council ; and  no  voice  in  the  affairs  of  the  Company,  except  through  the 
Trustees.  If,  therefore,  the  Trustees  were  controllable  by  the  Council,  who  repre- 


44 


ARTICLES  OE  ASSOCIATION  OP 


4.  The  Trustees  shall  make  no  loans  or  discounts,  without  the 
consent  of  the  Council,  or  of  a Committee  thereof,  appointed  for 
that  purpose ; and  shall  make  none  against  their  own  judgments 
of  expediency  or  right,  even  though  the  consent  of  the  Council 
be  given. 

5.  They  shall  make  no  loans,  directly  or  indirectly,  to  either 
or  all  of  themselves ; shall  never,  as  individuals,  become  either 
debtors  or  creditors  (except  for  their  salaries)  to  the  Company  ; 
and  never  be  holders  of  either  Productive  or  Circulating 
Stock  of  the  Company.* 

6.  They  shall  employ  a Cashier,  and,  if  need  be,  other  clerks 
and  servants  (except  a solicitor  or  attorney)  ; may  take  suitable 
bonds,  and  shall  also  be  themselves  personally  responsible  for  the 
fidelity  of  such  cashier,  clerks,  and  servants.! 

7.  The  Trustees  may  fix  Uie  salaries  of  the  Cashier  and  other 
clerks  and  servants,  except  that  the  aggregate  salaries  of  the 
Cashier  and  all  other  clerks  and  servants  (except  solicitor  or 

attorney)  shall  not  exceed dollars  per  annum,  without 

the  consent  of  the  Council. 

8.  The  Trustees,  with  the  consent  of  the  Council,  may  employ 
a standing  solicitor,  or  attorney,  whose  salary  shall  not  exceed 

sent  only  the  holders  of  Productive  Stock,  the  rights  of  the  holders  of 
Circulating  Stock  might  be  sacrificed  to  the  holders  of  Productive  Stock.  It 
is  important,  therefore,  that  the  Trustees  should  stand  in  an  independent  and  im- 
partial position  towards  all  classes  of  Stockholders,  and  be  directly  and  legally 
responsible  to  each  and  every  Stockholder,  of  the  three  several  kinds. 

The  prohibition  upon  the  Trustees’  making  any  loans,  except  with  the  consent 
of  the  Council,  who  represent  the  holders  (both  Primary  and  Secondary)  of 
Productive  Stock,  is  a sufficient  security,  to  those  Stockholders,  that  their 
interests  will  not  be  sacrificed  by  imprudent  loans. 

* This  provision  may,  at  first  view,  appear  unnecessarily  stringent ; but,  on 
reflection,  it  wilt  probably  be  seen  that  its  value,  as  a precaution  against  embez- 
zlement, and  against  the  various  sinister  influences,  that  might  otherwise  operate 
upon  the  Trustees,  is  such  as  to  outweigh  any  inconvenience. 

t As  the  Trustees  have  power  to  appoint  their  own  Cashier  and  other  ser- 
vants, without  the  consent  of  the  Council,  they  should  be  held  responsible  for 
their  fidelity. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


45 


dollars  per  annum,  -without  the  consent  of  the 

Council. 

9.  The  Trustees  shall  al-ways  have  the  banking  house  of  the 

Company  open  for  business,  at  least hours,  most  suitable  for 

the  convenience  of  customers,  on  every  day,  except  Sundays, 
holidays,  and  other  extraordinary  occasions. 

10.  The  Trustees  shall  take  no  lease  of  a banking  house  for  a 

longer  term  than  years,  nor  pay  a rent  of  more  than 

dollars  per  annum,  -without  the  consent  of  the  Council. 

Nor  shall  they  invest  more  than dollars  in  furniture 

(independently  of  the  necessary  hooks)  for  their  banking  house, 
-without  the  consent  of  the  Council. 


ARTICLE  XLVII. 

1.  The  Trustees,  before  entering  on  the  duties  of  their  trust, 

shall  either  give  a joint  bond,  in  the  sum  of dollars,  or 

several  bonds,  in  the  sum  of dollai-s  each,  -with  at  least 

three  separate  and  adequate  sureties  for  each  Trustee,  for  their 
fidelity  as  Trustees.  Such  bond  or  bonds  shall  run  to  the  Coun- 
cil, and  their  successors  in  that  office,  for  and  on  behalf  of  all  the 
Stockholders  in  said  Company  — (that  is  to  say,  all  holders  both 
of  Productive  and  Circulating  Stock)  collectively  and  indi- 
vidually. 

2.  Such  bond  or  bonds  shall  be  in  the  following  form,  (names, 
dates,  and  sums  being  made  to  correspond  with  the  facts  in  each 
case,)  to  wit : 


46 


ARTICLES  OE  ASSOCIATION  OP 


®ru0tee’0  Bonb. 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsandee  Spooner, 
in  the  Clerk’s  office  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 


Know  all  Men,  That  we,  A A , as  principal,  and 

H I , J K , and  L M — — , as  sureties, 

are  holden,  and  firmly  bound  and  obliged,  in  the  full  and  just 

sum  of  Sixty  Thousand  Dollars  — that  is  to  say,  the  said  A 

A in  the  whole  sum  of  Sixty  Thousand  Dollars,  and  the 

said  sureties  in  the  sum  of  Twenty  Thousand  Dollars  each  — 

unto  Z A , Y B , X C , 

D , [and  others,  naming  them,]  now  constituting  the  Council 

of  the  Boston  Banking  Company  (a  Mortgage  Stock  Banking 
Company,  having  its  Banking  House  in  Boston,  in  the  County  of 
Sufiblk,  in  the  State  of  Massachusetts,  and  whose  Articles  of 
Association  bear  date  January  1st,  1860)  and  to  their  successors 
in  said  office,  for  and  in  behalf  of  all  the  Stockholders  of  said 
Company,  both  collectively  and  individually;  that  is  to  say,  for 
and  in  behalf  of  all  holders  both  of  the  Productive  and  Circii- 
lating  Stock  of  said  Company.  To  the  which  payment,  well  and 
truly  to  be  made,  we  hereby  bind  ourselves,  our  heirs,  executors, 
and  administrators,  fii’mly  by  these  presents.  Sealed  with  our 
Seals.  Dated  at  said  Boston,  this day  of , 1860. 

The  Condition  of  this  Obligation  is  such  that,  whereas 

the  said  A A has  been  appointed  one  of  the  Trustees 

of  the  Capital  of  said  Boston  Banking  Company,  and  has  con- 
sented to  accept  said  trust. 

Now,  therefore,  if  he,  the  said  A A shall,  at  all 

times,  faithfully,  vigilantly,  and  honestly  perform  and  fulfil  all 
the  duties  of  said  trust,  towards  all  the  Stockholdei's  of  said 


A MORTGAaE  STOCK  BANKING  COMPANY. 


47 


Company,  both  collectively  and  individually  — that  is  to  say, 
towards  all  the  holders  both  of  the  Prodtjcttv^b  and  the  Circu- 
lating Stock  of  said  Company;  and  shall  make  good  to  said 
Company  collectively,  and  to  all  Stockholders  therein  individ- 
ually, (whether  holders  of  Productive  or  Circulating  Stock,) 
all  losses  suffered  by,  or  caused  to,  it  or  them,  by,  or  by  reason 

of,  any  fraud,  fault,  or  neglect  of  said  A A , in  his  said 

office  of  Trustee ; and  shall  also  pay  and  satisfy  all  judgments, 

which  may  be  recovered  against  said  A A , both  in 

private  suits  by  any  individual  Stockholder  or  Stockholders,  and 
in  suits  by  the  Council  of  said  Company,  for  losses  or  wrongs 
suffered  by  such  Stockholder  or  Stockholders,  individually  or 
collectively,  by,  or  by  reason  of,  any  fraud,  fault,  or  neglect  of 

said  A A , as  Trustee  as  aforesaid,  then  this  obligation 

shall  be  void ; otherwise  it  shall  remain  in  full  force. 

Signed,  sealed,  and  delivered, 
in  presence  of 


3.  And  if  it  shall  ever  reasonably  appear  to  a majority  (of  a 
quorum)  of  the  Council,  that  any  loss  or  losses  have  fallen  upon 
the  Company,  in  its  collective  capacity^  through  any  fraud, 
fault,  or  neglect  of  either  or  all  of  the  Trustees,  it  shall  be  the 
duty  of  the  Council  to  bring  appropriate  suit  or  suits  (at  the 
expense  of  the  Company)  on  the- bond  or  bonds  of  such  Trustee 
or  Trustees.  And  any  sum  or  sums,  recovered  in  such  suit  or 
suits,  shall  be  holden  in  trust  by  the  Council  until,  in  their  judg- 
ment, such  sum  or  sums  can  be  safely  and  properly  delivered 
over  to  some  one  or  more  of  the  Trustees  of  the  Company.  Or, 
if  such  sum  or  sums  cannot,  in  the  judgment  of  the  Council,  and 
within  a reasonable  time,  be  safely  or  properly  delivered  over  to 
any  Trustee  or  Trustees  of  the  Company,  the  Council  may,  in 
their  discretion,  apply  such  sum  or  sums  to  the  payment  of  any 


A A . [seal.] 

H I . [seal.] 

J K . [SEAL.] 

L M . [SEAL.] 


48 


ARTICLES  OP  ASSOCIATION  OF 


undoubted  debts  or  obligations,  due  by  the  Company  and  requir- 
ing immediate  payment. 

4.  And  if  it  shall  ever  be  made  reasonably  to  appear  to  a 
majority  (of  a quorum)  of  the  Council,  that  any  loss  or  losses 
have  fallen  upon,  or  that  any  wrongs  have  been  suffered  by,  any 
individual  Stockholder,  or  any  number  of  Stockholders  less  than 
the  whole,  of  said  Company  (whether  such  Stockholder  or  Stock- 
holders be  the  holder  or  holders  of  either  Productive  or  Circu- 
lating Stock)  by,  or  by  reason  of,  any  fraud,  fault,  or  neglect  of 
either  or  all  of  the  Trustees,  it  shall  be  the  duty  of  the  Council, 
on  the  request  of  such  Stockholder  or  Stockholders,  to  bring 
appropriate  suit  or  suits  (at  the  expense  of  the  Company)  on  the 
bond  or  bonds  of  such  Trustee  or  Trustees,  for  and  on  behalf  of 
such  Stockholder  or  Stockholders.  And  any  sum  or  sums  re- 
covered by  the  Council,  in  such  suit  or  suits,  shall  be  paid-  over, 
by  them,  to  the  Stockholder  or  Stockholders  entitled  thereto. 

Px’ovided,  however,  that  the  right  of  any  Stockholder  or  Stock- 
holders to  have  suit  brought  for,  or  in  behalf  of,  himself  or 
themselves,  by  the  Council,  and  at  the  expense  of  the  Company, 
as  aforesaid,  shall  not  preclude  such  Stockholder  or  Stockholders 
from  brino-ino:  suit  in  his  or  their  own  name  or  names,  if  he  or 

O O i 

they  shall  so  choose,  against  any  or  all  the  Trustees.  And  any 
judgment  recovered  in  such  suit,  by  such  Stockholder  or  Stock- 
holders, if  not  otherwise  paid,  shall,  on  demand  by  said  Stock- 
holder or  Stockholders,  be  enforced,  by  the  Council,  by  suit 
against  such  Trustee  or  Trustees,  and  his  and  their  sureties,  at 
the  expense  of  the  Company. 

5.  Whenever  a bond  or  bonds,  as  hereinbefore  provided  for, 
shall  have  been  given  by  any  Trustee,  or  Trustees,  no  renewal 
thereof  shall  be  claimed  by  the  Council,  oftener  than  once  in  five 
years,  unless  in  case  of  the  death  or  bankruptcy  of  a surety,  or 
of  his  removal  of  his  residence  from  the  State  of  Massachusetts. 

6.  In  case  of  any  disagreement  between  any  Trustee  or 
Trustees  and  the  Council,  as  to  the  suitableness  and  sufficiency  of 
any  surety  offered  by  such  Trustee  or  Trustees,  such  Trustee  or 


A MORTGAGE  STOCK  BANKING  COMPANY. 


49 


Trustees  shall  select  one  of  the  holders  of  Productive  Stock 
of  the  Company;  and  the  Council  shall  select  another  such 
holder ; and  the  two  so  selected  shall  select  another  person,  who 
is  a holder  of  neither  Productive  nor  Circulating  Stock  of  the 
Company;  and  the  three,  so  selected,  shall  investigate  the 
subject,  and  report  thereon,  in  writing,  to  the  Council ; and  the 
joint  report  of  any  two  of  them  shall  decide  the  question.  But 
the  Council  shall  not  be  required  to  accept,  as  a surety,  any 
person  not  a resident  of  the  State  of  Massachusetts. 


ARTICLE  XL  VIII. 

If  any  Trustee  shall  be  finally  convicted,  in  any  court  of 
justice,  of  any  embezzlement  or  other  crime,  committed  in  his 
office  as  a Trustee,  all  his  rights  and  powers,  as  a Trustee,  shall 
from  that  moment,  cease  and  determine,  and  his  place  as  Trustee 
be  vacant,  and  liable  to  be  filled  by  another. 


ARTICLE  XLIX. 

If  any  Trustee  shall  be  finally  convicted,  in  any  court  of 
justice,  of  any  infamous  crime,  committed  hy  him  otherwise 
than  in  his  capacity  as  Trustee^  he  shall  be  liable  to  be  re- 
moved from  his  office  of  Trustee,  by  votes  representing  a majority 
of  the  Productive  Stock  of  the  Company,  whether  held  by 
Primary  or  Secondary  Stockholders.  Said  votes  shall  be  given 
in  the  following  manner,  to  wit : The  necessary  number  of 
Stockholders  shall  subscribe,  upon  a book  kept  by  the  Trustees, 
a declaration,  fully  setting  forth  the  cause  of  the  removal,  and 
their  wish  and  determination  that  he  be  removed.  And  such 
declaration,  so  subscribed,  shall,  from  that  moment,  operate  to 
7 


50 


ARTICLES  OF  ASSOCIATION  OP 


extinguish  all  his  rights  and  powers  as  a Trustee,  and  to  make 
his  place  vacant,  and  liable  to  be  filled  by  another. 

And  each  subscriber  to  this  declaration  shall  affix,  to  his 
signature,  the  true  date  thereof,  and  the  number  of  shares  of 
Productive  Stock,  of  which  he  shall  be,  at  the  time,  the 
holder  and  owner ; and  shall  also  designate  himself  as  being 
either  a Primary  or  Secondary  holder,  as  the  case  may  be. 


ARTICLE  L. 

If  any  Trustee  shall,  at  any  time,  have  become  so  permanently 
sick,  insane,  or  unable  to  perform  the  duties  of  his  office  of 
Trustee,  or  shall  be  so  negligent  of  those  duties,  as  to  make  it 
necessary  or  proper  that  his  place  should  he  declared  vacant,  and  be 
filled  by  another,  and  the  fact  shall  have  been  ascertained  to  the 
satisfaction  of  not  less  than  four  fifths,  in  number,  of  all  the 
holders  of  Productive  Stock,  they  being,  at  the  same  time, 
holders  and  true  owners  of  not  less  than  four  fifths,  in  quantity, 
of  all  the  Productive  Stock  of  the  Company  (whether  such 
holders  be  Primary,  or  Secondary^  or  both)  and  a permanent 
record  thereof,  and  of  the  wish  and  determination  of  such  holders 
that  he  be  removed,  shall  have  been  made  on  the  books  of  the 
bank,  and  personally  subscribed  by  such  holders,  such  record 
shall,  from  the  moment  of  its  being  so  subscribed,  operate  to 
cancel  all  his  rights  and  powers  as  Trustee,  and  vacate  his  place 
as  Trustee,  and  make  it  liable  to  be  filled  by  another. 

And  each  subscriber  to  such  record  shall  affix,  to  his  signature, 
the  true  date  thereof,  and  the  number  of  shares  of  Productive 
Stock,  of  which  he  shall  be,  at  the  time,  the  holder  and  owner ; 
and  shall  also  designate  himself  as  being  either  a Primary  or 
Secondary  holder,  as  the  case  may  be. 


A MOKTGAGE  STOCK  BANKING  COMPANY. 


51 


ARTICLE  LI. 

Whenever  a vacancy  shall  occur  in  the  office  of  Trustee,  it 
shall  be  filled  by  the  votes  of  not  less  than  four  fifths,  in  number, 
of  all  the  holders  of  Productive  Stock,  they  being,  at  the  same 
time,  holders  of  not  less  than  four  fifths,  in  quantity,  of  all  the 
Productive  Stock  of  the  Company.  And  the  election  shall  be 
made  by  the  necessary  number  of  Stockholders  subscribing,  upon 
a book  of  the  bank,  a declaration  substantially  in  the  following 
form,  to  wit : 

“We,  the  subscribers,  being  the  holders  and  true  owners  of 
the  number  of  shares  of  Productive  Stock  of  the  Boston 
Banking  Company  set  against  our  names  respectively,  hereby 

declare  that  T T , of , in  the  County  of , 

in  the  State  of , is  our  choice  for  the  office  of  Trustee  of 

said  Company,  in  the  place  of  W W , removed 

[resigned,  or  deceased,  as  the  case  may  be].” 

And  each  subscriber  to  this  declaration  shall  affix,  to  his  signa- 
ture, the  true  date  thereof,  and  the  number  of  shares  of  Produc- 
tive Stock,  of  which  he  shall  be  at  the  time  the  holder  and 
owner ; and  shall  also  designate  himself  as  being  either  a Pri- 
mary or  Secondary  holder,  as  the  case  may  be. 

And  when  the  person,  so  appointed,  shall  have  given  the 
requisite  bonds  to  the  Council,  for  his  fidelity  as  a Trustee,  the 
other  Trustees  [or  Trustee,  if  there  shall  be  but  one]  shall  convey 
to  him  his  appropriate  property  and  rights  in  and  over  the  Capital 
Stock  and  other  property  of  said  Company,  by  a deed  in  the 
following  form,  (names,  dates,  and  numbers  being  made  to  corres- 
pond with  the  facts  in  each  case,)  to  wit : 


52 


ARTICLES  OF  ASSOCIATION  OP 


® rus  t H5  ee5 . 


[Entered  according  to  Act  of  Congress,  in  the  year  1860,  by  Ltsander  Spooner, 
in  the  Clerk’s  ofKce  of  the  District  Court  of  the  United  States,  for  the  District 
of  Massachusetts.] 


Whereas  R R , of , in  the  County 

of , in  the  State  of , has  been  duly  appointed 

one  of  the  Trustees  of  the  Capital  of  the  Boston  Banking 
Company : a Mortgage  Stock  Banking  Company,  ivhose  Articles 
of  Association  are  dated  January  1st,  1860,  and  whose  Banking 
House  is  in  said  Boston. 

And  Whereas,  We,  A A , and  B 

B , both  of  said  Boston,  are  now  the  only  Trustees  of  said 

Boston  Banking  Company. 

And  Whereas,  By  reason  of  the  appointment  aforesaid,  it 

has  become  our  legal  duty  to  convey  to  said  R R 

an  equal  right  and  property,  with  ourselves  respectively,  in  the 
Capital  Stock,  and  all  other  property,  of  said  Boston  Banking 
Company. 

Now,  Therefore,  Be  it  known,  that  we,  the  said  A 

A , and  B B , Trustees  as  aforesaid,  in  con- 

sideration of  the  premises,  and  of  one  dollar,  to  us  paid  by  the 
said  R R , the  receipt  of  which  is  hereby  acknowl- 
edged, and  for  the  purpose  of  investing  him,  the  said  R 

R with  equal  powers  and  rights  with  ourselves  respectively 

in  the  control  of  the  Capital  Stock  and  all  other  property  of  said 
Boston  Banking  Company,  do  hereby  give,  grant,  sell,  assign, 
and  convey,  and  have  hereby  given,  granted,  sold,  assigned,  and 

conveyed,  unto  the  said  R R , in  his  capacity  of 

Trustee  as  aforesaid,  and  to  his  successors  in  said  olEce,  one  third 
of  all  our  respective  rights  and  property  in  and  to  the  Capital 


A MORTGAGE  STOCK  BANKING  COMPANY. 


53 


Stock,  and  all  other  property,  of  said  Boston  Banking  Company, 
without  any  reservation  or  qualification  whatever. 

To  Have  and  to  Hold  the  same  to  the  said  B K , 

in  his  capacity  of  Trustee  as  aforesaid,  and  not  otherwise,  and  to 
his  successors  in  said  office  forever,  jointly  with  ourselves  and  our 
successors,  in  trust  for  the  holders  of  the  Productive  and  Cir- 
culating Stock  of  said  Company ; and  to  be  holden  and  adminis- 
tered in  accordance  with  the  said  Articles  of  Association  of  said 
Company,  and  not  otherwise. 

In  Witness  Whereof,  We,  the  said  A A , 

and  B B , have  hereunto  set  our  hands  and  seals 

this day  of , in  the  year  eighteen  hundred 

and . 

Signed,  sealed,  and  delivered,  ']  ^ [SEAL.] 

in  presence  of  | 3 3 _ 

D G . j 

F H . J 

Boston,  October  1st,  18 — . Recorded  in  the  Journal  [or 
Records]  of  the  Council  of  the  Boston  Banking  Company  for 
this  date  [or  in  some  particular  book  kept  by  the  Council,  de- 
scribing it,  with  the  page]. 

I D H , Pi'csH.  of  Council. 

[or  S B , Sec'y  of  Council.^ 

Boston,  October  2d,  18 — . Recorded  in  the  Books  of  the 
Trustees  of  said  Boston  Banking  Company,  to  wit,  in  [here 
describe  the  book,  whatever  it  may  be]  page  — . 

A A , Trustee. 

[or  E E , Cashier. \ 

And  said  Deed,  before  being  delivered  to  the  newly  appointed 
Trustee,  shall  be  recorded  in  appropriate  books,  both  of  the 
Council,  and  of  the  Trustees,  and  proper  certificates  of  such 
records,  substantially  in  the  forms  aforesaid,  shall  be  made  upon 


54 


AKTICLBS  OF  ASSOCIATION  OF 


the  Deed  itself.  And  the  Deed  shall  then  be  delivered  to  the 
newly  appointed  Trustee;  and  such  delivery  shall  operate  to 
invest  him  with  equal  rights,  as  Trustee,  with  any  and  all  his 
associate  Trustees.  And  he  shall  then  immediately  cause  said 
Deed  to  he  recorded  in  the  Registry  of  Deeds  for  the  County  of 
Suffolk. 


ARTICLE  LII. 

1.  The  regular  salaries  of  the  Trustees  shall  he  at  the  rate  of 

dollars  each  per  annum,  payable  semi-annually,  on  the 

regular  dividend  days. 

2.  The  regular  salaries  of  the  Trustees  may  be  increased,  for 
definite  periods,  not  exceeding  five  years  each,  by  the  votes  of  not 
less  than  four  fifths,  in  number,  of  all  the  holders  of  Productive 
Stock,  they  being,  at  the  time,  holders  of  not  less  than  four 
fifths,  in  quantity,  of  all  the  Productive  Stock  of  the  Com- 
pany. The  votes,  for  this  purpose,  shall  be  given  by  the  neces- 
sary number  of  Stockholders  subscribing,  upon  some  book  of  the 
bank,  kept  by  the  Trustees,  a declaration  substantially  in  the 
following  form,  to  wit : 

“We,  the  subscribers,  being  the  holders  and  true  owners  of 
the  number  of  shares  of  the  Productive  Stock  of  the  Boston 
Banking  Company,  set  against  our  names  respectively,  hereby 
give  our  vote  that  the  regular  salaries  of  each  of  the  three 
Trustees  of  said  Company  be  increased,  by  the  sum  of  one 
hundred  dollars  each  per  annum,  for  the  term  of  three  years, 
from  and  after  the  first  day  of  July,  1861.” 

And  each  subscriber  to  this  declaration  shall  affix,  to  his  signa- 
ture, the  true  date  thereof,  and  the  number  of  shares  of  Produc- 
tive Stock,  of  which  he  shall  be,  at  the  time,  the  holder  and 
owner ; and  shall  also  designate  himself  as  being  either  a Pri- 
mary or  Secondary  holder,  as  the  case  may  be. 

This  vote  shall  be  given  only  at  some  time  within  the  six 
months  next  preceding  the  day,  when  the  increased  salary  is  to 


commence. 


A MORTGAGE  STOCK  BANKING  COMPANY. 


55 


3.  In  addition  to  their  regular  salaries,  each  Trustee  shall 
have_^re  per  centum  of  all  the  clear  profits  of  the  business  done 
by  the  Company,  (independently  of  the  interest  on  the  mortgages,) 
the  same  to- be  payable  only  at  the  same  times  with  the  dividends, 
of  profits^  to  the  Primary  Stockholders. 

4.  Neither  the  salaries  of  the  Trustees,  nor  their  portion  of 
the  profits,  shall  ever  he  paid  to  them,  except  in  the  order, 
relatively  to  other  claims,  in  which  they  stand  in  Article  XXIX. 
And  if  it  shall  ever  happen  that  the  entire  Productive  Stock 
of  the  Company  shall  be  transferred,  from  any  one  body  of  Pri- 
mary Stockholders,  in  redemption  of  the  Circulating  Stock, 
any  arrearages,  either  of  salaries  or  profits,  due,  at  the  time,  to 
any  of  the  Trustees,  shall  be  forfeited  by  them.* 

5.  In  case  of  the  death  or  resignation  of  a Trustee,  or  of  his 
removal  for  any  other  cause  than  crime  committed  in  his  office  of 
Trustee,  his  proportion  of  any  accumulated  profits  shall  be  paid 
to  him,  his  heirs,  executors,  administrators,  or  assigns,  within 
three  months  after  such  death,  resignation,  or  removal.  In  case 
of  his  office  ceasing  by  reason  of  crime  committed  by  him  in  his 
office  of  Trustee,  his  proportion  of  any  accumulated  profits  shall 
be  paid  to  him,  his  heirs,  executors,  administrators,  or  assigns, 
within  six  months  thereafter,  unless  it  shall  be  found  necessary  or 
proper  to  retain  them  as  an  indemnity  for  his  crime. 


AKTICLE  LIII. 

The  Trustees  may,  with  the  consent  of  the  Council,  (or  an 
authorized  Committee  thereof,)  take  Productive  Stock,  or  any 
other  real  or  personal  property,  and  especially  the  bills,  certifi- 


* This  provision  is  proper,  because  it  is  proper  that  the  Trustees  should  have 
some  personal  motive  to  vigilance  in  the  management  of  the  bank.  It  is  also 
necessary,  because  otherwise  the  Productive  Stock  would  pass  into  the  hands 
of  the  new  body  of  Primary  holders,  subject  to  an  incumbrance,  and  there.- 
fore  not  at  its  full  nominal  value. 


56 


ARTICLES  OF  ASSOCIATION  OF 


cates,  or  scrip  of  other  banks,  in  satisfaction  of  debts  due  to  the 
Company.  And  when  such  stock  or  other  property  shall  have 
been  taken,  it  shall,  with  the  consent  of  the  Council  (or  an 
authorized  Committee  thereof)  be  disposed  of,  by  auction  or 
otherwise,  soon  as  it  can  be  advantageously  for  the  interests  of 
the  Company. 


ARTICLE  LIV. 

If  any  holder,  either  Primary  or  Secondary,  of  Productive 
Stock,  shall  become  indebted  to  the  Company,  either  as  princi- 
pal, or  surety,  such  indebtedness  shall  operate  as  a lien  upon 
his  Productive  Stock,  unless  a written  contract  to  the  contrary 
be  entered  into. 


ARTICLE  L V. 

The  Company  may  receive  the  Circulating  Stock  of  the 
Company,  on  deposit,  wuthout  interest,  and  be  responsible  for  its 
safe  keeping ; but  such  Stock  shall  not  be  loaned,  nor  re-issued, 
by  the  Company,  until  it  shall  have  been  redeemed. 


ARTICLE  LVI. 

The  Trustees,  with  the  consent  of  the  Council,  or  an  author- 
ized Committee  thereof,  may  allow  money  and  currency,  other 
than  the  Circulating  Stock  of  the  Company,  to  he  deposited 
in  the  vaults  or  safes  of  the  Company,  without  compensation ; 
but  they  shall  not  make  the  Company  in  any  way  responsible  for 
its  safe  keeping ; and  shall  not  loan  nor  re-issue  the  same,  for,  or 
on  behalf  of,  the  Company,  nor  on  securities  running  to  the 
Company.* 

* The  reason  for  this  Article  is  this.  If  this  system  of  banking  should  be 
generally  adopted,  the  number  of  banks  would  be  so  great,  that  they  would  be 
able  to  supply  all  demands  for  a currency,  without  issuing  their  deposits.  All 


A MORTGAGE  STOCK  BANKING  COMPANY. 


57 


AETICLE  LVII. 

Whenever  the  consent  of  the  Council,  or  any  Committee 
thereof,  shall  be  necessary  to  any  genei’al,  or  any  particular, 
action  of  the  Trustees,  such  consent,  if  the  Trustees  require  it, 
shall  be  expressed  by  a resolution  or  memorandum,  entered  upon 
the  records  of  the  Council,  and  a certified  copy  thereof  furnished 
to  the  Trustees ; said  certified  copy  to  be  -written  in  a book  kept 
by  the  Trustees,  if  they  shall  desire  it. 


ARTICLE  LVIII. 

All  holders  of  Productive  Stock  — and  also  all  holders  of 
Circulating  Stock,  which  shall  have  been  presented  for  redemp- 
tion, and  not  been  redeemed  — shall  be  entitled,  at  all  reasonable 
times,  to  all  necessary  and  proper  information,  from  the  Trustees, 
as  to  the  afiairs  of  the  Company,  and  to  access  4o  the  books  of 
the  Company,  so  far  as  such  access  shall  be  necessary  for  the 
purpose  of  investigating  the  pecuniary  condition  of  the  Company. 
And  all  holders,  whether  Primary  or  Secondary,  of  Produc- 
tive Stock,  shall  be  entitled  to  a printed  copy  of  the  Company’s 
Articles  of  Association. 


ARTICLE  LIX. 

The  Trustees,  with  the  consent  of  the  Council,  or  an  author- 
ized Committee  thereof,  may  make  such  contracts  with  banks  and 

necessity,  therefore,  for  loaning  deposits,  will  be  snperseded.  By  loaning  their 
deposits,  the  banks  would  incur  a liability  to  their  depositors,  which  is  foreign  to 
the  nature  of  the  system,  and  which,  for  obvious  reasons,  ought  to  be  avoided. 
The  power  to  loan  deposits  would  be  practically  useless  to  the  banks ; because 
the  banks,  by  reason  of  their  number,  would  be  unable  to  keep  out  all  their  own 
Circulating  Stock,  to  say  nothing  of  their  deposits. 

8 


58 


ARTICLES  OP  ASSOCIATION  OP 


individuals,  for  the  redemption  of  the  currency  of  the  Company, 
in  such  towns  and  cities,  other  than  Boston,  as  may  be  thought 
expedient,  with  a view  to  promote  the  circulation  of  the  currency. 

ARTICLE  LX. 

Neither  the  Trustees,  as  such,  nor  the  Company,  by  any  of  its 
servants  or  agents,  shall  ever  contract  any  indebtedness,  except 
for  rents,  salaries,  and  such  other  necessary  and  proper  expenses, 
as  are  necessarily  implied  in  taking  care  of  the  Company's 
capital,  and  carrying  on  its  business  as  a Banking  Company,  in 
the  manner  hereinbefore  specified. 


ARTICLE  LXI. 

At  such  time,  on  or  after  the  first  day  of  January  in  the  year 
Eighteen  Hundred  and  Eighty,  as  the  Council  may  appoint, 
the  Trustees  shall  cease  to  grant  loans,  and  to  issue  the  Circulating 
Stock  of  the  Company ; and  shall,  as  soon  thereafter  as  reason- 
ably may  he,  collect  all  debts  due  the  Company ; compel  payment 
of  the  mortgages  (having  given  the  holders  of  the  mortgaged 
estates  one  year’s  notice  of  the  demand,  and  allowing  them  to 
offset  Productive  Stock  in  payment  of  their  mortgages,  so  far 
as  that  can  be  done  consistently  with  justice  towards  all  con- 
cerned) ; redeem  all  the  Circulating  Stock  of  the  Company ; 
and  do  whatever  may  be  necessary  to  close  up  the  affairs  of  the 
Company,  and  dissolve  the  Company  itself.  But  the  mortgages 
shall  not  be  discharged,  nor  the  Company  dissolved,  until  all  the 
liabilities  of  the  Company  shall  be  cancelled ; all  its  Circulating 
Stock  redeemed;  all  holders  of  Productive  Stock  paid  for 
their  Stock  ; and  all  certificates  of  both  Productive  and  Circu- 
lating Stock  cancelled  or  destroyed. 

Provided,  however,  that  if,  after  the  Trustees  shall  have  given 
due  notice  to  the  public  to  return  the  Circulating  Stock  of  the 


A MORTGAGE  STOCK  BANKING  COMPANY. 


59 


Company  for  redemption,  and  after  ample  time  shall  have  elapsed 
for  the  purpose  of  returning  such  Stock  for  redemption,  any 

small  amounts  thereof,  not  exceeding  dollars,  in  the 

aggregate,  shall  still  be  outstanding,  and  it  shall  be  believed,  by 
the  Trustees,  that  such  Circulating  Stock  shall  have  been  either 
lost,  or  destroyed,  or  that  it  is  not  likely  soon  to  be  returned  for 
redemption,  they  shall  proceed  to  dissolve  the  Company,  dis- 
tribute its  capital  to  the  individual  owners,  reserving  in  their  own 
hands,  out  of  the  funds  of  the  Company,  enough  gold  or  silver 
coin  to  redeem  all  the  still  outstanding  Circulating  Stock. 
And  if  such  Circulating  Stock,  or  any  portion  thereof,  shall  be 
returned  to  said  Trustees  for  redemption,  at  any  time  within 
three  years  thereafter,  it  shall  be  redeemed  by  them.  But  if  any 
portion  of  said  outstanding  Circulating  Stock  shall  not  be 
returned  for  redemption  within  the  said  three  years,  it  shall  be 
presumed  to  have  been  lost  or  destroyed,  and  the  fund  reserved 
for  its  redemption  shall  be  paid  over  to  its  rightful  owners. 

In  Witness  op  all  which.  We,  the  said  F F , 

G G , H H , and  I I , mortgagors 

aforesaid,  and  Primary  holders  of  all  the  Productive  Stock 

of  said  Company,  and  also  we,  the  said  A A , B 

B , and  C C , Trustees  hereinbefore  named,  in 

token  of  our  acceptance  of  said  trust,  have  set  our  hands  and 
seals  to  nine  copies  of  these  Articles  of  Association  (consisting  of 
fifty-nine  printed  pages)  and  have  also  set  our  names  at  the 
bottom  of  each  and  all  the  said  fifty-nine  pages,  this  first  day  of 
January,  in  the  year  Eighteen  Hundred  and  Sixty. 


Nine  Copies  Signed  and  Sealed, 
and  One  Copy  Delivered  to 
Each  of  the  Parties  Signing 
the  same,  in  presence  of  us. 

A D . 

B E . 

C F . 

D G . 


F F . [seal.] 

G G . [seal.] 

H H . [seal.] 

I I . [seal.] 

A A . [seal.] 

B B . [seal.] 

C C . [seal.] 


I 1st  D E X 


T O 

ARTICLES  OF  ASSOCIATION. 


Art.  1. 
Art.  2. 
Art.  3. 
Art.  4. 
Art.  5. 

Art.  6. 
Art.  7. 
Art.  8. 
Art.  9. 
Art.  10. 
Art.  11. 

Art.  12. 

Art.  13. 
Art.  14. 

Art.  15. 
Art.  16. 


Name  of  Company. 

Place  of  Business. 

Names  of  Trustees. 

Capital  Stock.  Copies  of  Mortgages. 

Shares  $100  each. — Original  owners  of  the  Stock. — 
How  the  Stock  is  apportioned  among  them. 
Productive  Stock  — entitled  to  Dividends. 

AYhat  the  Dividends  shall  consist  of. 

Circulating  Stock  — amount,  &c. 

Circulating  Stock  — what  it  is. 

Form  of  Certificates  of  Circulating  Stock. 
Certificates  of  Circulating  Stock  not  to  exceed 
100,000  Shares. 

Circulating  Stock  — how  issued  for  Circulation  as 
Currency. 

Circulating  Stock  — how  redeemed. 

Original  holders  of  Productive  Stock  shall  be  termed 
Primary  Stockholders. 

Secondary  Stockholders  — who  shall  be  so  called. 
Dividends  to  Secondary  Stockholders. 


62 


INDEX  TO  ARTICLES  OF  ASSOCIATION. 


Art.  17. 
Art.  18. 

Art.  19. 

Art.  20. 

Art.  21. 


Art.  22. 

Art.  23. 
Arts.  24, 

Art.  27. 
Art.  28. 

Art.  29. 


Dividends  to  Primary  Stockholders. 

Productive  Stock  — how  selected  — to  be  transferred 
in  redemption  of  Circulating  Stock. 

Pi'oductive  Stock,  transferred  in  redemption  of  Circu- 
lating Stock,  may  be  re-purchased  by  the  Company. 

On  what  terms  Productive  Stock,  transferred  and 
re-purchased,  shall  be  restored  to  its  Primary 
holders. 

When  the  entire  Productive  Stock  shall  have  been 
transferred,  in  redemption  of  Circulating  Stock, 
the  right  to  re-purchase  shall  become  extinct, 
and  the  Secondary  Stockholders  become  Primary 
holders. 

Secondary  Stockholders,  on  becoming  Primary  hold- 
ers, shall  receive  no  dividends  until  new  certifi- 
cates shall  be  issued  to  them. 

On  what  conditions  the  Trustees  may  accept  loans 
from  Primary  Stockholders. 

25,  and  26.  Company  may,  on  certain  conditions, 
elect  to  pay  interest  on  Circulating  Stock,  pre- 
sented for  redemption,  rather  than  redeem  it  on 
demand. 

How  Circulating  Stock,  in  less  amounts  than  $100, 
may  be  redeemed. 

Productive  Stock  may  be  re-purchased,  and  Circu- 
lating Stock  redeemed,  on  regular  dividend  days, 
without  notice,  at  other  times  with  notice,  to 
holders. 

In  what  order  the  resources  of  the  Company  shall  be 
applied  to  the  payment  of  expenses,  the  redemp- 
tion of  Circulating  Stock,  the  payment  of  divi- 
dends, salaries,  &c. 


INDEX  TO  ARTICLES  OF  ASSOCIATION. 


63 


Art.  30. 
Art.  31. 
Art.  32. 

Art.  33. 

Art.  34. 

Art.  35. 

Art.  36. 

Art.  37. 
Art.  38. 
Art.  39. 

Art.  40. 
Art.  41. 


Form  of  “ Transfer  of  Productive  Stock,  in  Redemp- 
tion of  Circulating  Stock.” 

Form  of  “ Re-conveyance  of  Productive  Stock  from  a 
Secondary  to  a Primary  Stockholder.” 

Productive  Stock,  transferred  in  redemption  of  Cir- 
culating Stock,  to  be  credited,  and  when  re-pur- 
chased, to  be  debited,  to  the  Primary  holder. 

Primary  Stockholders  entitled  to  Certificates  of  Pro- 
ductive Stock.  — Form  of  Certificates.  — Also, 
form  of  “ Primary  Stockholder's  Sale  of  Produc- 
tive Stock.” 

Secondary  Stockholders  entitled  to  Certificates  of 
Productive  Stock.  — Form  of  Certificates.  — Also, 
form  of  “ Secondary  Stockholder’s  Sale  of  Pro- 
ductive Stock.” 

Form  of  “ Sale,  by  a Primary  Stockholder,  of  his 
Right  to  Productive  Stock,  in  the  hands  of  a 
Secondary  Stockholder.” 

Trustees  authorized  to  pay  taxes  on  the  mortgaged 
estates,  keep  buildings  and  fixtures  insured.  — 
How  insurance  money,  recovered,  may  be  applied. 

Power  of  Trustees  over  the  mortgaged  estates,  when 
interest,  &c.,  is  not  paid. 

Terms,  on  which  mortgaged  estates  may  be  released 
from  the  mortgages. 

Records  to  be  preserved  of  the  particular  numbers  of 
any  Shares  of  either  Productive  or  Circulating 
Stock,  that  may  be  cancelled. 

What  days  shall  be  dividend  days. 

No  dividends  to  be  paid,  except  from  interest  actually 
accrued,  and  do?ia  fide  profits  already  realized.  — 
Consent  of  Council  required  to  the  payment  of 
dividends  of  profits  to  Primary  Stockholders. 


64 


INDEX  TO  AETICLES  OP  ASSOCIATION. 


Art.  42. 

Art.  43. 
Art.  44. 

Art.  45. 
Art.  46. 
Art.  47. 

Arts.  48, 

Art.  51. 

Art.  52. 
Art.  53. 

Art.  54. 

Arts.  55 
Art.  57. 

Art.  58. 

Art.  59. 

Art.  60. 
Art.  61. 


Actual  payment  of  no  more  interest  to  be  required 
of  Primary  Stockholders  than  necessary. 

Accumulated  profits  may  he  loaned. 

Notes,  &c.,  not  to  be  transferred,  until  after  they 
become  due,  unless  with  consent  of  makers  and 
indorsers. 

Councillors  — how  chosen  — their  powers,  &c. 

Trustees  — • their  powers,  duties,  &c. 

Trustees  to  give  Bonds.  — Form  of  their  Bonds.  — 
How  sued  on  their  Bonds. 

49,  and  50.  How  Trustees  may  forfeit,  or  be  re- 
moved from,  their  offices. 

How  vacancies  in  the  office  of  Trustee  may  be  filled. — 
Form  of  “Trust  Deed.” 

Salaries  of  Trustees. 

What  property  may  be  taken  in  payment  of  debts  due 
the  Company. 

Indebtedness  of  holders  of  Productive  Stock  shall 
operate  as  a lien  on  their  Stock. 

and  56.  Deposits. 

Consent  of  Council  to  acts  of  Trustees,  to  be  ex- 
pressed by  resolution,  or  memorandum,  &c. 

Stockholders  to  be  entitled  to  information,  and  to 
access  to  books  of  the  Company. 

Contracts  may  be  made  for  redemption  of  the  cur- 
rency at  other  places  than  Boston. 

Company  to  contract  no  debts,  except,  &c. 

When  and  how  the  Company  may  be  dissolved. 


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